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Source: Securities Times

Will the automobile "price war" continue?

On the evening of July 29, BYD's Fangchengbao announced its one-year brand renewal strategy. The "Bao 5" model was launched with new prices, and the price range is now 239,800 yuan to 302,800 yuan.

It is reported that the "Leopard 5" was officially launched on November 9, 2023. Compared with the official guide price at that time (289,800 yuan to 352,800 yuan), the price of all models of the car was reduced by 50,000 yuan.

BYD's Leopard 5 series has a price cut of RMB 50,000

BYD's Fangcheng Leopard announced today its one-year brand renewal strategy, reducing the price of Leopard 5 by 50,000 yuan to 239,800 yuan to 302,800 yuan.

Fangchengbao is BYD's professional personalized brand for the mid-to-high-end market. On August 16, 2023, the Fangchengbao brand was officially launched. BYD Chairman and President Wang Chuanfu said at the time that BYD will bring unprecedented professional and personalized car experience to global users through Fangchengbao, and work with users to start a "greater transformation" of new energy vehicles, making cars a unique "personalized exclusive product" for everyone. It is reported that Fangchengbao integrates BYD's top professional technology, forward-looking concepts, and a vertically integrated supply chain system for the entire industry chain. Wang Chuanfu's expectation for Fangchengbao is "new energy + unlimited possibilities."

On November 9, 2023, the Leopard 5 was officially launched, with the Exploration Edition priced at 289,800 yuan, the Pilot Edition priced at 309,800 yuan, and the Yunnian Flagship Edition priced at 352,800 yuan. In April this year, the Yunnian Deluxe Edition of the Leopard 5 was launched with a guide price of 329,800 yuan.

According to the plan, Fangchengbao will launch the medium-to-large hardcore SUV model Leopard 8 in the third quarter of this year to consolidate its electric drive off-road products. At the same time, according to the "2+X" product plan, Fangchengbao will also launch sports cars and other models. Fangchengbao is intending to shift from focusing on niche personalized products to covering products that are closer to the mainstream market.

In June this year, Fangchengbao announced to officially add dealers to its channel model. At present, Fangchengbao's first batch of investment channels are planned to cover 22 provinces, 4 municipalities and 5 autonomous regions across the country.

In terms of sales, as of the end of June, the Fangchengbao brand has accumulated sales of nearly 24,000 units since its launch seven months ago. However, it is worth noting that since April, sales have not exceeded 3,000 units for three consecutive months.

Big V tested Leopard 5 and found that its fuel consumption was 18L per 100km.

BYD: A large number of abnormal driving behaviors, sued and claimed 5 million yuan

Shortly after the Leopard 5 was launched on the market, a review video by car blogger "Daqinjunshatuan" (Yao*qiang) attracted attention.

In the video, the blogger claimed that he tested the fuel consumption of BYD's Formula Leopard 5 car per 100 kilometers in a normal driving manner, and finally concluded that the fuel consumption of this model reached 18 liters per 100 kilometers.

Later, some netizens discovered their traffic violations based on the test video and reported it to the traffic police. After that, the "Daqin Army Shaanxi Group" released a video, saying that they had "surrendered" to the traffic control department and were punished. The speed reached 103 kilometers per hour on a section of a national highway in Wuhai City with a speed limit of 80 kilometers per hour. The traffic police had fined them 200 yuan and deducted 3 points for this behavior.

In May this year, BYD’s official legal department released information on its Weibo account saying that it had decided to formally file a lawsuit against blogger Yao * Qiang, demanding that he make a public apology and compensate for losses of 5 million yuan.

BYD stated that in response to the police's need for evidence investigation, after retrieving relevant vehicle operation data, it was found that the vehicle had a large number of abnormal driving behaviors on the day of the test, including but not limited to 3 periods of high-speed driving with a speed exceeding 180km/h, and 6 periods of high-speed driving with a speed exceeding 170km/h; during the entire high-speed driving process, the speed range of 120-140km/h accounted for more than 37%, the speed range of 140-160km/h accounted for more than 46%, and the speed exceeded 160km/h accounted for more than 4%; and the vehicle repeatedly exhibited abnormal driving phenomena such as sudden acceleration and deceleration.

BYD said that Yao Qiang's abnormal driving behavior had endangered road safety, and his false claims of normal fuel consumption results had also caused serious damage to the BYD Formula Leopard brand and the reputation of the Leopard 5. In addition to calling the police, BYD decided to formally file a lawsuit against Yao Qiang, demanding that he make a public apology and compensate for losses of 5 million yuan.

When will the “price war” among car companies end?

Since last year, the domestic auto market has started rounds of price wars. In the first half of 2024, the price war in the auto industry was very fierce. According to statistics from Cui Dongshu, secretary-general of the China Passenger Car Association, 136 models have been reduced in price in the first five months of 2024, and the scale of price reduction exceeds 90% of the whole year of 2023, surpassing the total scale of price reduction in 2022.

In order to maintain their market share, BBA (BMW, Mercedes-Benz, and Audi) were also forced to get involved in the price war. Since the fourth quarter of last year, the retail discount rate of luxury car brands has been rising. But the sharp price cuts did not bring about an increase in sales. In the first half of this year, Mercedes-Benz sold a total of 352,600 vehicles in China, a year-on-year decrease of 6.5%. BMW (including MINI) sold 375,900 vehicles in China, a year-on-year decrease of 4.2%. According to the data from the China Passenger Car Association, in the first half of this year, the market share of German, Japanese, and American brands decreased by 1%, 2.1%, and 1.2%, respectively. However, recently, car companies led by BBA are adjusting prices. The reporter visited several 4S stores and learned that the prices of many models of BMW, Mercedes-Benz, and Audi have stabilized and rebounded.

Where will the auto market go in the future? Does the gradual adjustment of product retail prices by brands such as BMW mean that the price war in the auto market will gradually stop? Should we participate in or fight a price war? There are different opinions in the auto industry on this topic.

At the 2024 China Automotive Chongqing Forum in early June, many automotive industry leaders expressed their views on the hotly debated "volume" in the automotive industry.

Wang Chuanfu said that in recent years, China's new energy vehicles have undergone earth-shaking changes under the guidance of national strategies, and Chinese independent brands have also made great progress in technology improvement, industrial chain construction, product development, marketing and other aspects. It should be noted that industry development has challenges and opportunities, and the core of the current "volume" is market competition. Looking back at the past 40 years of reform and opening up, my country's economic take-off has been accompanied by the development of competition and the market. "Entrepreneurs must embrace and participate in this "volume" and this competition, "go overseas" in the competition, support Chinese brands for the country, and create the world's number one brand."

Zeng Qinghong, chairman of GAC, believes that the involution of the domestic auto market has gone too far. "It is normal to constantly compete on price, traffic, bosses, and chairman, but it is not normal if it is excessive. What is excessive? If there is no money to be made in excessive price competition, this is not normal." Zeng Qinghong said: "Regarding price wars, I have always said that there is no problem with giving up profits, but giving up capital is a problem. If you can't make 1 million, what kind of business should you do, what taxes should you pay, what industry should you be in, (everyone) should return to a rational price war."

Zhu Huarong, Chairman of Changan Automobile, said, "The roll is the normal process of good money driving out bad money, and it is the best way for the industry to quickly return to healthy competition." The roll means pursuing excellence, pushing Chinese brands to new heights, maximizing user benefits, and creating value for users.

Li Shufu, Chairman of Geely Holding, said that the healthy development of any industry must achieve good economic benefits in terms of input-output ratio. Endless internal competition and crude price wars will result in cutting corners, counterfeiting and selling fake products, and disorderly competition that does not comply with regulations. For the automotive industry, only healthy competition in accordance with the law can achieve sustainable and high-quality development, and China's achievements in electric vehicles can be consolidated and respected.

Li Xueyong, deputy general manager of Chery Automobile Co., Ltd., believes that with the rapid development of Chinese brands, price wars are inevitable. Li Xueyong believes: "First, it is impossible not to fight a price war. The correct answer is to create the best value for consumers at the corresponding price. Second, the serious involution of the 'price war' has helped the rise of Chinese brands on the other hand, and the technological progress and cost advantages of Chinese brands have been reflected. Third, the transition from price war to value war reflects the company's understanding and persistence of long-termism. Fourth, the core of the transition from price war to value war is to focus on the global market. It tests the company's ability to layout the global market. To focus on future development, it is necessary to build a world-class automobile company." Li Xueyong believes that the transition from price war to value war is a reflection of the company's values, and reflects the company's strategic thinking on how to gain a foothold in market competition and serve users.