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New changes are taking place in the domestic automobile market.

On one side isBMWLuxury and joint venture brands represented by have all withdrawn from the price war in a high-profile manner. On the other hand,BYDEquation LeopardThe price reduction of 50,000 yuan has touched the nerves of many car buyers, and the Didi-style price war does not seem to be stopping.

Is the price war among car companies more beneficial or harmful to the industry and consumers? How long can it last? We conducted a survey to see how users, dealers, and car companies view this issue.

Dealers: Firmly oppose price wars

Among the survey results, what surprised Tianyajun the most was the attitude of the dealers.

Logically speaking, price cuts will definitely help boost sales, and dealers should generally welcome it. However, it is unexpected that it is the dealers who are most resistant to price wars.

Mr. Lei, the person in charge of a 4S store of a certain independent brand, said that price wars are not only bad, but also unsustainable and will have a negative impact on the entire automobile circulation link.

In his opinion, on the one hand, the continuous price war will inevitably lead to overall pressure on manufacturer costs, parts supply quality, and 4S store operating profits. In particular, the decline in profits will lead to layoffs or even bankruptcy of 4S stores, damaging the interests of dealers. On the other hand, these will also further lead to a reduction in user services. For users who have already bought a car, the used car value retention rate will be reduced due to the price war with new cars, and the market will shrink.

Regarding these views, without talking about the manufacturers and consumers, I have a question about the impact on dealers: If they can make small profits but quick turnover, it is at least better than consumers holding on to their purse strings and not buying cars, right?

To this question, Mr. Xia and Mr. Feng, who are in charge of the other two joint venture 4S stores, gave the same answer: the extent to which the interests of dealers are protected in this process depends entirely on how the car companies evaluate the dealers. For example, if the price of a car drops, but the same number of cars are sold, the dealer's income will decrease, and it is even possible that the dealer will lose money on each car sold. If the manufacturer's policies are not in place at this time, it will be a great loss for the dealer.

So, is it possible to increase the volume to make up for the loss of profit? Mr. Xia’s reply was very sharp: What if the volume cannot be increased even if the price is reduced?

Indeed, under the current market conditions, the essence of a price war is actually a game for inventory and orders. Since it is a fight, there will be winners and losers. So is it possible that those who strongly oppose price wars are the "losers" in the competition? What do dealers of strong brands think about this?

Tianya Jun interviewed Mr. Xu, the person in charge of a 4S store of a leading brand in terms of sales. Although he initially said that price wars were a good thing for consumers, he then changed his tone and believed that this was "definitely not a good thing" for dealers. His logic was very consistent with that of Mr. Xia above: dealers are more dependent on the policy support of manufacturers. Manufacturers are not philanthropists and will inevitably ask dealers to bear part of the pressure.

In this way, from the perspective of dealers, no matter which camp or brand they are in, they are all on the opposing side of this price war. Considering the bleak current situation of large automobile sales groups such as Guanghui, if such a price war continues, dealers will indeed continue to lose blood, and bankruptcies will only become more and more frequent.

Manufacturer: Mainly depends on the efficacy

The dealers were unanimously opposed, but the attitudes of the manufacturers were quite different. To sum it up: it depends on the efficacy.

For example, BMW, the core brand that withdrew from the price war in a high-profile manner this time, BMW China officially stated that the previous price cuts harmed the interests of dealers, so in the second half of the year, BMW will "focus on business quality and support dealers to make steady progress" in the Chinese market.

The primary reason why BMW withdrew from price cuts may be that the price cuts did not achieve the desired effect.

Since the end of last year,BMW i3, i5 and other pure electric models have all received substantial discounts, among which the bare car price of BMW i3 after discount is less than 200,000 yuan, and the topic of "BMW's price cut" has even become a hot search on Weibo. However, these have not brought sales growth. In the first half of the year, BMW's domestic sales fell by 4.2% year-on-year. Sales said that after the price increase, more people came to 4S stores to look at cars, because many people "buy when prices rise, not when prices fall."

BMW's mentality should also represent the public.Toyota, GM and other joint venture brands.

Mr. Wang, an executive of a domestic brand with good sales performance, told Tianyahajun that he felt that although price wars would cause many bad consequences overall, there are many domestic car companies now and the process of survival of the fittest has not yet ended. Price wars are difficult to avoid and restrain, and "kill one and it's one," which is similar to the integration process of the mobile phone industry in previous years.

At present, in this process, even if the opponent is successfully "killed", frequent price cuts are also damaging the hard-earned high-end results of the manufacturers.

User: I won’t be the one who pays the final price, right?

As for the user survey opinions, Tianya Jun originally thought that there was no suspense, who doesn't want to buy a car cheaply? But the survey results were also unexpected.

Tianya conducted the survey among a group of 1,000 owners. The neighbors who participated in the discussion were basically young people aged 25-35. Among those who gave feedback, only about one-third of the participants firmly supported the continuation of the price war. Most neighbors believed that it might be a good thing for those who have already decided to buy a car, but in the long run, they are still worried about the negative impact of the price war.

The first is the impact on quality.

An owner of a car modification business believes that "given the nature of China, the cars will eventually be made from 'gutter oil'" and it is the consumers who may pay the price in the end. This is consistent with the concerns of many dealership managers.

Indeed, the automobile industry itself is not a highly profitable industry today. In 2023, BYD, a leading company with a high self-sufficiency rate in parts, had a net profit margin of 5%, which is already "far exceeding the industry average". The net profit margin of most domestic auto companies is less than 2%, and many are even making losses.

In the years when there are no price wars, manufacturers will actually reduce costs after the product reliability reaches a certain level every year. For example, they will replace high-priced parts with low-priced ones. This substitution, at a statistical level, will not seriously reduce the reliability of the vehicle.

However, under the logic of price wars, in addition to passing on pressure to dealers, another way for manufacturers is to extend payment cycles for suppliers and lower the prices of accessories. The former will reduce the service level of dealers, while the latter may directly make it easier for consumers to buy defective products.

The second impact is to increase consumers' purchasing concerns.

One neighbor said that he had recently set his eyes on a mid-to-large SUV from a new brand, but he was hesitant to make a purchase because he was worried that the price would drop after he bought it and he would become a "leek".

It is obvious that when price wars become an expectation, the car-buying mentality of many consumers has undergone a qualitative change, from initial stimulation to inhibition. This is something that both the initiators and winners of the price wars do not want to see.

Could a protracted price war result in a lose-lose situation for all parties?

Judging from the results of the survey, whether it is dealers, manufacturers or users, they are generally opposed to the continuation of the price war. The few who do not oppose it are only limited to the short-term level, let alone support for the price war.

For dealers, the benefits of a price war are small and the risks are great, so they will definitely be losers if they continue to fight.

For strong manufacturers, the opponents that can be defeated have already been defeated. If they continue to fight against those that cannot be defeated, they may suffer losses of 800 and the efforts made to develop high-end products will be in vain.

For consumers, if the price war continues, it will be difficult for them to avoid bearing the quality risks brought about by excessive price cuts.

It should be said that prices themselves are indeed determined by the laws of the market economy, but the invisible hand is not omnipotent. Once price competition becomes disorderly, everyone will become a loser.

The motorcycle industry has a recent precedent in this regard. Chinese-made motorcycles were once popular in Southeast Asia. For example, they once occupied 80% of the market share in Vietnam. However, due to vicious price competition and poor quality control, the market share of Chinese-made motorcycles fell to 1%, and the market was reoccupied by Japanese motorcycles, which were more expensive but of more stable quality.

Perhaps it was precisely to avoid such a thing from happening that the Political Bureau of the CPC Central Committee held a meeting on July 30th and clearly put forward the requirement of "strengthening industry self-discipline and preventing 'involution' vicious competition". Everyone immediately turned their attention to the automobile industry. The central government's final decision may indicate that this round of fierce price war is about to come to an end.

For those car companies that still want to fight a price war to maintain sales, I advise you to stop. What do you think? Welcome to leave a message to discuss.