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Abstract: The halo of luxury cars in the past is fading.

Wen Chenpeng

The price war in the auto market has stirred up waves again. If the previous one was a "magnitude 7 earthquake", now it can be described as a "magnitude 10 earthquake".

Even the always coldBenz, were also involved, further confirming the rumor that "luxury car prices collapsed."

Take the Mercedes-Benz C200L as an example. The suggested retail price of this car has dropped from 334,800 yuan to 202,700 yuan, a price reduction of nearly 40%.EQB The price cut for 260 was even more drastic, from 352,000 yuan to 176,000 yuan, almost a 50% discount.

Those who were the first to "pick up bargains" on BBA are already busy showing off their work on social platforms such as Xiaohongshu: car owners who have already purchased the cars are sharing their experiences of "buying at the bottom", while those who are waiting to buy with money are finding out the lowest prices in their area.

1. Luxury car sales dilemma

Since the end of 2023, news of luxury car price cuts has become more frequent, and now it has even dropped to the "single digit":BMW i3The bare car price starts from 170,000 yuan.AudiThe entry-level version of A4 only costs more than 190,000 yuan.Mercedes-Benz AThe bare car price of 200L has dropped to 160,000 yuan, and as the top-selling C-class car,Mercedes-Benz C260The price of L Fashion also dropped to more than 200,000.

Behind Mercedes-Benz's big price cut is the sales dilemma of foreign luxury cars under the impact of domestic new energy vehicles, which can be seen from the financial report showing a downward trend in sales, revenue and profits.

In the first quarter of this year, Mercedes-Benz's global cumulative sales were 568,400 vehicles, down 6% year-on-year. Among them, the sales of pure electric vehicles were 50,500 vehicles, down 9% year-on-year. In the Chinese market, the sales of Mercedes-Benz passenger cars were 168,900 vehicles, down 11.6% year-on-year.

The sales pressure is also reflected in the revenue data. Mercedes-Benz's revenue in the first quarter was 35.873 billion euros, a year-on-year decrease of 4%; net profit was 3.025 billion euros, a sharp drop of 25% year-on-year, which is indeed uglier.

Of course, in the domestic market, Mercedes-Benz is not the only luxury car dealer facing similar difficulties.

according toBMWThe group released its first quarter financial report this year, with revenue down 0.6% year-on-year and net profit down 19.4% year-on-year. In the Chinese market, its sales also suffered a year-on-year decline of 3.8%. Audi was no exception, with revenue of 13.725 billion euros in the first quarter, down 18.7% year-on-year; operating profit fell from 1.816 billion euros in the same period last year to 466 million euros; the overall quarterly delivery was 402,000 units, of which the Audi brand delivered 397,000 units, down 4.5% year-on-year.

The luxury car halo of BBA seems to be becoming a thing of the past.

The plummeting sales of luxury cars has made it even harder for dealers. The 2023 National Auto Dealer Survival Status Survey Report shows that the loss rate of auto dealers in 2023 reached 43.5%. Among them, about one-third of luxury/imported car brand dealers suffered losses.

2. Sales Anxiety Behind Price Cuts

Behind the drastic price cuts are the deep sales anxiety of traditional luxury brands. From January to April this year, the monthly sales of BMW i3 were 4745, 2870, 4069 and 4489 respectively;Mercedes-Benz EQEThe highest monthly sales volume of the Audi Q4 e-tron was only 1,523 units, of which only 750 units were sold in February.

According to the first quarter report of 2024 released by the BMW Group, BMW delivered 187,700 vehicles in China in the first quarter of 2024, a year-on-year decrease of 3.8%. During the same period, BMW achieved sales growth in Europe and North America. BMW officials attributed the decline in sales in the Chinese market to the newBMW 5 SeriesIt won’t be launched in China until February 2024.

As for Audi, its total sales in the Chinese market will be about 729,000 vehicles in 2023, significantly lagging behind the sales of BMW and Mercedes-Benz in China. In January this year, Audi officially announced the replacement of its president for China.

PorscheThe electric coupeTaycanAfter it was launched, it had no sales due to its high price. Although some dealers later offered a huge discount of 440,000 yuan, it still did not sell well, with monthly sales of only more than 100 units. In the first quarter of this year, Porsche's sales in the Chinese market fell 25% year-on-year to 16,340 units.

Behind the competition, the changes in the automotive industry are also worth paying attention to. It is obvious that the phenomenon of "one rises while the other falls" between joint venture brands including BBA and Chinese brands has become a long-term trend in the industry.

During the 2024 Beijing Auto Show, the booths of traditional luxury brands such as Mercedes-Benz, BMW, and Audi are no longer crowded.BYDThe booths of Chinese brands such as , Xiaomi, etc. were packed with people, and even attracted many foreign exhibitors to watch.

According to the data from the China Association of Automobile Manufacturers, in the first four months of this year, the market share of domestically-owned passenger cars was 63.5%, up 8.4 percentage points year-on-year, a record high. This means that the market share of joint venture brands is less than 40%; among them, the market share of German and Japanese brands barely remains above 10%, while the market share of American, Korean, French and other brands remains in the single digit.

In April, the top 20 domestic new energy vehicle sales of more than 200,000 units were almost all Chinese brands, with onlyTesla Model YandModel 3Two models are from foreign brands.QJM9With 15,139 units sold, it became the sales champion for vehicles over 500,000 units in April, regardless of powertrain or body type.

The Chinese automobile market is completing the transition from brand orientation to value orientation. More and more consumers no longer recognize the premium of traditional luxury brands, and product strength has become the primary factor affecting purchases.

3. Who is making money?

Since Mercedes-Benz, BMW and Audi are all losing money, who is making money in the first half of the year?

The multinational automobile groups that have disclosed their financial reports so far include:Toyota, Hyundai and GM are the three companies whose revenue and profits can still maintain positive growth.

Moreover, according to the financial reports of the three companies, the Chinese market has become increasingly "marginalized" among the core markets where the three companies are making money today, and they mainly rely on the US market to make huge profits.

Toyota Motor, which made a profit of 1.33 trillion yen (about 650 billion yuan) in the first fiscal quarter (April 1, 2024 - June 30, 2024), said that the good sales of hybrid models in the North American market were the key to driving its performance growth.

Hyundai Motor's sales in the first half of this year hit a record high of 85.68 trillion won. The North American market was its highest sales region, with a total of 1.074 million vehicles sold, accounting for 31%.

It is precisely by expanding the sales proportion of environmentally friendly cars and SUV models, especially in North America, that Hyundai Motor has successfully increased the sales price of each vehicle, thus making a net profit of 39.104 billion yuan in the first half of this year.

PlusKiaWith a net profit of approximately RMB 30 billion from automobiles, Hyundai Motor Group's net profit in the first half of this year has undoubtedly even surpassed that of Mercedes-Benz.

So even though Korean brands seem to have little market share left in China, their focus has long since shifted to higher-profit markets. After all, making money is the key to living a better life in the future.

In addition, GM's current financial strategy further proves this point.

In the first half of this year, GM's net income attributable to shareholders totaled nearly $6 billion, up 19.2% year-on-year, and its net profit margin also rose from 5.9% in the same period last year to 6.5%.

In the second quarter of this year, GM delivered 696,086 vehicles in the United States, a year-on-year increase of 0.6%. In fact, this is also the main source of GM's current profits.

Because from the current product structure of General Motors, mid-to-large SUVs and pickup trucks dominate, and the continued hot sales of these models in the North American market and the steady expansion of electric vehicles have greatly promoted the growth of GM's sales and performance.

ThatTeslaWoolen cloth?

Yes, Tesla has also fallen, and the decline is quite large. Not only did its revenue in the first half of the year fall by 3% year-on-year to $46.8 billion, but its net profit was also halved year-on-year to only $2.6 billion.

Tesla's losses have in fact further made the industry realize how important the "scale effect" is - this eternal truth in the automotive industry.

IV. Conclusion

Objectively speaking, for BBA, although its earning ability and sales volume have begun to decline, it is still a behemoth, and it would be arbitrary to assert that it has fallen.

After all, automobile is a long-cycle industry, and the capabilities accumulated in the past are still expected to be applied to broader market competition, especially global competition.

However, as Zhang Yongwei, vice chairman and secretary general of the China Electric Vehicle 100 Association, said, the next two years will be a critical period for car companies to develop new energy businesses. When the car market enters the "involution 2.0 era", competition among car companies will become more intense and the competitive landscape will become more differentiated. Even Mercedes-Benz and BMW need to be alert and respond carefully.