2024-08-14
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arts | Ren Xueyun
Cover source | Tuchong Creative
January 2023,TeslaChina announces its modelsModel 3andModel YThe prices of the two models were reduced by 20,000 to 48,000 yuan, firing the first shot in the price war.
Various automakers have launched various price reduction strategies, including cash discounts, subsidies, more free benefits, and lower car loan interest rates. Guojin Securities' research report pointed out that in the price war in 2023, the price reduction of major models of automakers reached 29%.
If the "price war" started by Tesla last year has not yet spread to the base camp of fuel vehicles, then at the beginning of this year,BYDThe escalation has pushed this price war to its peak.
The trend has spread from domestic brands to luxury brands, and even super luxury brands have been involved. According to statistics from Cui Dongshu, secretary general of the China Passenger Car Association, 67 models saw price cuts from January to March this year, which is more than 60% of the models that saw price cuts throughout last year.
In the early stages of the price war, automakers achieved sales growth, but then showed signs of fatigue. According to the China Passenger Car Association, the wholesale sales of passenger car manufacturers nationwide in July this year were 1.965 million vehicles, down 4.9% year-on-year and 9.4% month-on-month.
While price wars have failed to stimulate sales, industry-wide pressure has swept the entire auto market. Upstream and downstream companies in the industry chain are suffering. The profit margins and market space of automakers and parts suppliers have been compressed, and auto dealers at the end of the industry chain are under even greater pressure.
OneBMWAuto sales told Tech Planet that price cuts no longer boost sales, but have made consumers wait and see. In July this year, BMW China was the first to withdraw from the price war.Benz、AudiLuxury car brands followed suit, followed by Volkswagen,Toyota、Honda、NIO, Ideal, etc. are also gradually recovering cash benefits or rights...
At this point, the price war that lasted for more than 18 months finally showed signs of cracking.
BBA, the first shot in the fight against price war
“There won’t be 170,000BMW i3", a BMW 4S store salesperson told Tech Planet. According to him, from the big price cut around the Dragon Boat Festival to the beginning of August, the price of this model has fallen back by nearly 50,000 yuan from the lowest point, "Now if you pick up the car and add insurance, it will cost 230,000 yuan."
In mid-July this year, BMW China took the lead in withdrawing from the price war and announced that "BMW will focus on business quality in the Chinese market in the second half of the year and support dealers to make steady progress." The salesperson at the BMW 4S store mentioned above said that the prices of all BMW products have been raised by 30,000 to 50,000 yuan.
Following the price adjustment of BMW, luxury car brands such as Mercedes-Benz and Audi followed suit. In addition to BBA (BMW, Mercedes-Benz, Audi), Volkswagen, Toyota, Honda,VolvoBrands such as Audi and Audi have also reduced their terminal discounts. A Cadillac dealer told Tech Planet that the price cuts will be gradually recovered from August. An Audi salesperson said that the current increase in the price of Audi Q5 is not high, only less than 10,000 yuan, but it will continue to fall in the future.
Tech Planet visited several stores of "new forces" in Beijing and found that compared with traditional brands, most new force brands achieved price adjustment by equity adjustment.Hongmeng Intelligent Driving, Ideal, NIO and other domestic brands, the car purchasing rights are shrinking in August.
Ask the worldA car salesperson said that the correction in August was mainly reflected in the financial interest subsidies and cash discounts, among which the new M5,SmartS7The annual fee rate has been restored from 1.99% to 2.99%. The 3,000 yuan cash discount for the new M5 and new M7 Ultra has been cancelled.
andIdeal AutoWe have started to gradually recover our rights since July.Ideal L6The L series will no longer come with a charging station starting from July, and the L7/8/9 series will also cancel this benefit starting from August. In addition, Ideal Auto Sales said that the 5,000 yuan limited-time subscription benefit for L series models will also end in the middle of this month.
A consumer who plans to buy Ideal L6 in full in the near future said that the limited-time first sale rights of Ideal L6 have been reduced. "If you buy it in late August, you will spend nearly 10,000 yuan more than in June with the same configuration."
Coincidentally, NIO is also tightening its preferential rights. According to the official news released by NIO, starting from August 12, the subsidy for adding/replacing a car will be reduced from 10,000 yuan to 8,000 yuan. A salesperson said that starting from August 11, the car purchase subsidy will be gradually cancelled, and the price of the previously discounted models will be increased by about 10,000 yuan.
Affected by the price increase, many consumers on social media platforms such as Xiaohongshu and Weibo have adopted a wait-and-see attitude. Frontline sales of many brands have also sensed the change in consumer sentiment after the price increase. A BMW salesperson said, "Now prices are relatively transparent online, and most consumers can check the previous prices. The price increase has made consumers more hesitant to place orders."
However, a BMW dealer said that the current price increase is just the beginning, and prices will be adjusted on a weekly basis based on market sentiment.
"We haven't made any money in the past two years. We've lost money on every car we sell," lamented a Mercedes-Benz dealer. However, despite this, the pressure of capital chain turnover and inventory compensation, as well as employee layoffs, have made it impossible for him to get out in a short period of time.
Despite knowing that they would suffer losses, many dealers still chose to enter the market when market competition was fierce. However, the pressure on dealers is gradually reaching its peak.
According to the "2023 National Automobile Dealer Survival Status Survey Report" released by the China Automobile Dealers Association, the loss ratio of dealers in 2023 was 43.5%, about one-third of luxury/imported brand dealers were in the red, and the proportion of profitable joint venture brand dealers was only 29.9%.
When car companies shouted the slogan of "lowering prices" to gain market share and shouted out the same price for gasoline and electric vehicles, dealers were also caught up in it. The above-mentioned dealers told Tech Planet that the reason for following the price cut at that time was to exchange sales for rebates.
In the past, dealers could be said to have a "huge profit" business. Car brands encouraged dealers to sell cars through rebates per car and financial credit support, which was also an important source of dealer income. When the price war was fierce, many dealers sold cars at a loss per car, hoping to get rebates from brands, which was the key source of profit.
The above-mentioned dealer said that even if selling cars would result in losses before, due to the obvious sales stimulus, the dealer was still able to make a profit after receiving rebates.
Over the past 550 days, many dealers and automakers have sold cars at a loss in order to achieve high sales, but this balance was broken when profits and market share could not be achieved through price cuts.
Taking BMW as an example, according to data, the BMW Group's sales in the Chinese market in the first half of 2024 were 375,900 vehicles, a year-on-year decrease of 4.2%. In the second quarter of this year, sales in China reached 188,500 vehicles, a year-on-year decrease of 4.7%.
Despite the largest price cuts in June, BMW sold a total of 56,601 vehicles, a slight increase of 0.6% year-on-year; Mercedes-Benz sales were 53,554 vehicles, a year-on-year decrease of 12.2%; Audi sold a total of 56,708 vehicles, a year-on-year decrease of 19.1%.
While fuel car brands responded to the "sales-only theory" by raising prices, domestic brands also raised objections to the "weekly sales" list. The "weekly sales" list is a product of the companies' advocacy of "sales-only theory" in the context of the automobile price war.
At the end of July this year, Li Bin, founder, chairman and CEO of NIO, said that he could no longer tolerate the weekly sales rankings of its competitors, and revealed that the release of the weekly rankings had exacerbated industry anxiety.auspiciousVP Yang Xueliang reposted the post on Weibo, saying, "I am also against publishing a weekly chart."Xpeng MotorsChairman He Xiaopeng also said on the same day, "Venture capital companies in the United States are investing in large models, chips and other fields in full swing. After returning to China, I found that... everyone is working on the 'weekly sales chart'..."
When price cuts fail to bring about a real increase in sales, they become a burden for automakers. An automotive supply chain insider said that this burden is not only reflected in the compression of profit margins, but also affects product quality.
Is the “low-price involution” coming to an end?
According to the data from the National Bureau of Statistics, the current profit margins of the automobile industry from 2017 to 2023 were 7.8%, 7.3%, 6.3%, 6.2%, 6.1%, 5.7% and 5.0% respectively. In the first half of this year, the profit margin of my country's automobile industry was 5.0%.
The annual decline in profit margins has led some automakers to believe that "healthy profits are more important than market share". At the same time, they have released signals of withdrawing from the price war by raising prices, but this does not mean that the price war has entered its final stage.
Tech Planet visited stores and found that some brands are still choosing to maintain price cuts or continue to increase discounts.
for example,Xiaomi MotorsThe benefits in August remain the same as in July. By paying a deposit of 5,000 yuan, you can still receive Nappa leather seats worth 8,000 yuan and free lifetime use of Xiaomi Pilot enhanced intelligent driving function.
On July 29, BYD willEquation LeopardCar modelsLeopard 5The official price was directly reduced by 50,000 yuan.SAIC Volkswagenaspect,ID.3, ID.4 is still continuing its promotion, and the sales said that "no notification of price reduction has been received."
In this regard, the above-mentioned automotive supply chain personnel said that the price war has shown a polarized trend. "Strong car companies will only continue to increase their efforts and try to occupy more market share through price wars. Brands that cannot keep up with the pace may be eliminated."
It is worth mentioning that the price war in the first half of 2024 was mainly concentrated on models priced below 200,000 yuan. In order to participate in the price war, many car companies continued to open up in a new way by launching sub-brands or upgrading models.
This year, NIO has launched its sub-brand Ledao Auto, and Xpeng Motors has launched its mona sub-brand. In addition to differences in configuration and service, these two sub-brands are seen as the key to NIO and Xpeng's low-price sales strategy. A salesperson at an Xpeng Motors direct store said that the price of MONA M03 is estimated to be around 130,000 yuan, directly targeting BYD's Qin anddolphinAnd other models.
Geely Automobile has reduced prices in disguise through product iteration and upgrading.Lynk & CoNew energy vehiclesLynk & Co 08 EM-P has added new models, lowering the starting price to 175,800 yuan, a direct reduction of 33,000 yuan from the original starting price of 208,800 yuan.
Since the first quarter of 2024,Changan Automobile、GAC GroupThe profit margins of many listed automobile companies, including SAIC Group, have declined to varying degrees. Even BYD has seen a trend in which its net profit growth rate lags behind its sales growth rate.
As the negative impact of the price war in the auto industry becomes increasingly prominent, although many auto brands have called for "staying away from involution", they have actively or passively entered the battle in the face of fierce market competition. Before the market is cleared and supply and demand are balanced, this battle will be difficult to stop in a short period of time.
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