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Our reporter Chen Yannan reports from Beijing

"I am personally pessimistic about being able to prevent involutionary competition in the short term, because each car company has a different tolerance threshold, so it is difficult to formulate rules to cover all situations."

Recently, at the Zero View Auto Online Salon hosted by China Business News with the theme of "What is the 'real key' for auto companies to break through under full competition", Yang Xiaolin, a senior auto media person and editor-in-chief of Cheyitiao, said.

Yang Xiaolin said that new energy vehicles are developing rapidly, but the market is also becoming increasingly fierce. New car manufacturers and traditional OEMs all want to get a share of the new energy vehicle market. In this process, new car manufacturers take the lead in "beating" down prices. They have the support of the capital market and are not profit-oriented for the time being, so they can run very fast in the new energy track.

"In the process of speed racing, many companies may be pushed forward by the tide of the times, either actively or passively," said Yang Xiaolin. "In this process, some companies claim to be long-termists, but behind the scenes they are all zero-sum games."

In this regard, Yang Xiaolin suggested that in terms of methods, I think to prevent involutionary competition, first of all, leading enterprises should take the lead, because leading enterprises occupy most of the market share and, to a certain extent, have cost advantages and the right to formulate market rules. If leading enterprises do not stop, such involution will be difficult to reverse.

Yang Xiaolin gave an example: "For example, among the BBA, BMW set a good example by stopping the price war first. After that, many car companies such as Mercedes-Benz and Audi followed suit. Now the prices of luxury cars are falling month by month. This approach will indeed cause sales and orders to decline in the short term, but it is the right direction and a sustainable development direction."

He further stated that the three BBAs account for more than 70% of the entire luxury car market share, and they can influence the market behavior of other car companies through their own adjustments. However, in the market segments with prices below 300,000 yuan or 200,000 yuan, the top three or top five leading companies in terms of market share can actually follow the practices of BBA and reach a consensus to avoid involutionary competition.

Yang Xiaolin also emphasized that it is difficult to avoid internal circulation through appeals at the moral level, but rather a fair and just system should be established and strict law enforcement should be carried out.

"I think there is still room for strengthening strict law enforcement. Some companies that violate regulations or engage in unlawful behavior should be exposed, disclosed and punished. This will serve as a warning to other companies," said Yang Xiaolin.

"In fact, companies still need to control their own operating and production capacity risks. The best way to break out of internal competition is to shift from homogeneous products to differentiated and distinctive competition," Yang Xiaolin suggested.

At present, the automotive industry has gone through a turbulent half year. So where will the industry go in the second half of the year? In this regard, Yang Xiaolin said, I personally think that there are actually several trends and challenges worth paying attention to in the second half of the year. Among them, the more important one is the differentiation of joint venture brands.

"Joint venture brands have been under particularly great pressure in the past two years. This is due to the rise of Chinese brands in recent years, which have accelerated the industry's empowerment of electrification and intelligence. As a result, in the process of joint venture brands bringing their products to market, the intelligent experience cannot keep up with the upgraded needs of Chinese users. So, the next two to three years may be an even more intense moment, and whether joint venture brands can maintain their market share may be the focus that needs attention." Yang Xiaolin said.

It is understood that in the first half of 2024, the market share of China's independent automobile brands has steadily increased, and the share of Chinese brand passenger cars in the domestic market has exceeded 60%, a record high, while the market share of joint venture brands has decreased accordingly.

"This may determine the changes in the Chinese market structure. Now joint venture brands have entered the strategic defense stage, so what we need to pay attention to next is whether joint venture brands can actively transform themselves in terms of intelligence," said Yang Xiaolin.

He further said that in contrast, Chinese brands are rising in the mid-to-high-end market, such as Huawei, Xiaomi, and Wei, Xiaoli, and Li Auto, which are all impacting higher prices in the Chinese auto market. From this perspective, Chinese brands will also be differentiated in the mid-to-high-end market. In the future, I believe that Chinese brands will quickly occupy a part of the mid-to-high-end market through the leap of intelligence.

However, Yang Xiaolin also pointed out that China's local mid-to-high-end brands, such as Lynk & Co, WEY, Hongqi, and Xingtu, will also be differentiated. "In fact, there may not be so many brands in the Chinese market in the end, and only a few brands can really survive," he said.

In Yang Xiaolin's view, through the development paths of Lynk & Co and Zeekr under Geely and BYD, we can see that the impact on the high-end market is not smooth sailing, and it is not easy for Chinese brands to occupy a place in the high-end field.

"In the future, I also hope that Chinese brands can gain a firm foothold in the mid-to-high-end market, maintain the 200,000-300,000 yuan price range, and then continue to 'move upwards', and even climb to the 1 million yuan peak, and become world-class brands," said Yang Xiaolin.

(Editor: Zhang Shuo, Reviewer: Tong Haihua, Proofreader: Zhang Guogang)