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In recent days, BBA's withdrawal from the price war has sparked heated discussions in the market. The general withdrawal of luxury car brands has sparked discussions among everyone. However, a piece of news came that the biggest problem of the price war is that it has hit BBA dealers hard, and some dealers even suffered monthly losses of up to 3 million. How should we view this matter?

1. Price war hits BBA dealers hard

According to the Shanghai Securities News, the topic of "BMW withdraws from China's price war" has recently attracted attention and heated discussions inside and outside the industry. It is reported that BMW 4S stores in many parts of China have begun to adjust prices; and BMW sales said that all previous quotations are invalid and prices will gradually increase this week. A consumer revealed that he placed an order for a BMW i3 electric car at a BMW store on June 18, but the BMW 4S store now directly refused to sell it to him. Another consumer said that he had paid his deposit, but the sales said that the price had increased and he would give her a full refund.

"BMW has now begun to withdraw from the price war. We may reduce production to ensure quality and will no longer give price cuts like before." A sales staff of Shanghai Greenland Baoshi told the Shanghai Securities News that if car prices drop too much, car companies will come out to maintain prices. Now is the stage of price maintenance, and then prices will gradually fall back.

In terms of the extent of price adjustment, the above salesperson revealed that the BMW X3 has been directly raised by 20,000 yuan, and the BMW X5 has been raised by 40,000 yuan. The X3 was adjusted last week, the 5 Series started to adjust this week, and the X1 may start to adjust next week. "The prices have been raised nationwide, not just ours. For example, the i3 will lose 50,000 yuan for each car sold, and dealers cannot afford to lose money. But now it has not been raised by 50,000 yuan, we are still losing money, but we have reduced the loss a little."

"BMW is a high-end luxury car brand. The huge discounts like the ones offered some time ago have never been seen in BMW's history. Last month, all (dealers) sold at a loss in order to meet dealer targets. We have more than 200 people a month, and with such a large venue, we lost more than 3 million yuan." A salesperson from Shanghai Shangde Baojun told the Shanghai Securities News reporter.

2. What should you do if a dealer loses 3 million yuan a month?

In today's fiercely competitive automobile market, price wars have become a common means of competition. However, for dealers of luxury car brands such as BBA (Mercedes-Benz, BMW, and Audi), the impact of price wars is huge, and some dealers even lose up to 3 million yuan a month. What is going on? How should we view this?

First of all, dealers play a vital role in the automobile sales chain. They are not only the display window of automobile brands, but also the bridge between automobile manufacturers and end consumers. Dealers have greatly improved consumers' car buying experience and brand loyalty by providing a series of services such as professional pre-sales consultation, vehicle display, financial services, and after-sales maintenance. For luxury brands such as BBA, the image, service quality and professionalism of dealers are directly related to the brand image and market reputation.

Secondly, for high-end car brands like BBA, dealers are usually in a relatively weak position. This is because the market pricing of high-end car brands is usually relatively fixed, and consumers have a high level of awareness and loyalty to these brands, and are not easily affected by price wars. However, once involved in a price war, these dealers have to reduce their profit margins in order to maintain their market share, and even sell at a loss, which will undoubtedly deal a major blow to the profitability of dealers.

Third, the dealers’ business model is relatively traditional, with a large number of rigid expenses such as venues and labor. This puts them under greater pressure and risk when facing price wars. Dealers need to rent or purchase large showrooms and repair workshops, which have high rental or purchase costs. At the same time, in order to maintain normal operations, they also need to hire a large number of sales staff, after-sales service staff, management staff, etc., and labor costs are also a considerable expense.

In addition, dealers also need to invest a lot of money in the purchase of inventory vehicles. The backlog of inventory vehicles not only takes up a lot of funds, but also increases storage costs and risks. In the price war, if the vehicle sales are not smooth, the inventory backlog problem will become more serious, further increasing the burden on dealers.

Moreover, the larger the scale of a dealer, the higher its fixed expenses. When price wars lead to a decline in sales profits, larger dealers will suffer more serious losses due to their high costs.

Fourth, it is not easy for car dealers to withdraw from price wars, as this may lead to reduced market competitiveness. However, this may also be an opportunity for transformation and upgrading. Dealers can make up for the lack of price competitiveness by improving service quality and customer experience and enhancing brand loyalty. At the same time, dealers can also find new growth points by expanding diversified profit models such as financial business, second-hand car transactions, and online marketing.