news

Our reporter Chen Jingbin reports from Guangzhou

After more than a year of automobile price wars, the market finally showed signs of slowing down. Many joint venture automakers quietly raised their terminal prices, suggesting that their competitive strategies were quietly changing.

In mid-July, BMW China announced that it would pay more attention to business quality in the second half of the year and support dealers to steadily advance their market layout. It is generally believed that this statement shows that BMW intends to withdraw from the fierce price war. Soon after, there were reports that Mercedes-Benz and Audi also planned to follow BMW's example and prepare to raise product prices. At the same time, rumors of price adjustments by brands such as Volvo, Volkswagen, Toyota and Honda have also attracted widespread attention in the market.

However, unlike some joint venture automakers that have adopted the strategy of reducing discounts and stopping price cuts, domestic independent brands represented by BYD have chosen another path, offering consumers benefits at prices that are closer to the market.

BYD frequently releases new cars and keeps the prices of the two new models in the Ocean Network series at the lowest level. This strategy is completely different from that of joint venture car companies.

Zhang Xiang, Secretary General of the International Association of Intelligent Transportation Technology, said in an interview with China Business News that from a market perspective, the automobile price war is not a bad thing, and backward automobile companies can be eliminated through the survival of the fittest. However, considering that GAC, SAIC, Dongfeng, FAW and other companies mainly rely on joint venture brands for profit, fierce market competition may lead to a significant reduction in their sales and profits, and even face the risk of losses.

BYD accelerates its market share

As joint venture automakers have chosen to withdraw from the price-cutting trend, BYD has gone the other way and accelerated this process. BYD's recent frequent new car launches are a reflection of this strategy.

According to the observation of the reporter of China Business News, less than two months after BYD released Qin L DM-i in Xi'an on May 28, BYD launched Song L DM-i and Song PLUS DM-i in Zhengzhou on July 25. Then, two weeks later, BYD released the 2025 Haibao and Haibao 07 DM-i in Shenzhen. This series of releases shows BYD's strong efforts in expanding its product line.

At the same time, BYD has further intensified market competition by lowering the prices of new cars. The starting price of the 2025 Haibao is 175,800 yuan, which is 4,000 yuan lower than the 179,800 yuan of the 2024 model. The starting price of the five configuration models of Haibao 07 DM-i is 139,800 yuan, which is 10,000 yuan lower than the current Haibao DM-i's 149,800 yuan. This series of price reduction strategies shows BYD's clear attitude towards the market.

BYD's active participation in the competition is not accidental. BYD Chairman and President Wang Chuanfu made it clear at the beginning of this year that the transformation of the automobile industry has entered a deep water zone, and the development of new energy vehicles will be further accelerated. No company can slow down in this process. Therefore, BYD must go all out and accelerate its development. At the 2024 China Automotive Forum on July 13, Li Yunfei, General Manager of BYD Brand and Public Relations, also said that the more Chinese cars are rolled out, the stronger they will be, and the better they will be.

It turns out that this competitive strategy has indeed brought BYD a significant market advantage. On August 8, data released by the China Passenger Car Association showed that the national passenger car market retail volume in July was 1.72 million vehicles, a year-on-year decrease of 2.8% and a month-on-month decrease of 2.6%. However, in the new energy vehicle market, the retail volume in July reached 878,000 vehicles, a year-on-year increase of 36.9% and a month-on-month increase of 2.8%. More importantly, in July, the domestic retail penetration rate of new energy vehicles exceeded 50% for the first time, reaching 51.1%, marking the first time that the sales of new energy vehicles in the domestic market exceeded those of fuel vehicles.

As the penetration rate of new energy vehicles increases, BYD is also accelerating its market share. According to data released by BYD, the sales of new energy vehicles reached 342,400 units in July, a year-on-year increase of 28.83%, and the monthly sales volume has set a new record. As of the end of July, BYD's cumulative sales of new energy vehicles this year have reached 1.955 million units, a year-on-year increase of 28.83%. BYD has exceeded 300,000 units in monthly sales for five consecutive months, and its market share has steadily accounted for one-third of the country.

BYD's increase in market share not only brought about economies of scale, but also further consolidated its leading position in the new energy vehicle market.

Zhang Xiang pointed out that leading automakers such as BYD, with their high market share and scale advantages, can expand their profit margins by reducing component costs, thus having greater room for price cuts. For this reason, price wars have become the mainstream in China, and leading automakers have reshuffled by cutting prices, forming healthy competition, that is, reducing prices without sacrificing product quality.

Wang Peng, an associate researcher at the Beijing Academy of Social Sciences, also said that BYD, as a leading company in the new energy vehicle market, has maintained market popularity and attracted more consumers by accelerating price cuts and new car launches. This fierce market competition trend not only helps BYD increase its market share, but also promotes the survival of the fittest in the entire automotive industry. As the market penetration rate of new energy vehicles increases and consumer demand increases, BYD has further consolidated its market position through price cuts and new car launches. But at the same time, BYD's accelerated competition may also put pressure on other new energy vehicle brands, prompting the entire industry to accelerate technological innovation and competition.

Market competition promotes the survival of the fittest

In sharp contrast to BYD's choice to actively compete, senior executives of many auto companies such as GAC, Great Wall, and FAW have expressed clear opposition to the current "involution" phenomenon in the auto industry.

Zeng Qinghong, chairman of GAC Group, said that the excessive "involution" in the domestic auto market has lost its rationality, and the industry's price war should maintain a bottom line and return to rationality. Wei Jianjun, chairman of Great Wall Motors, also pointed out that the Chinese auto industry is in a state of disorderly "involution", and someone needs to stand up and speak out to maintain market order and defend industry fairness. He emphasized: "We should cherish the hard-won achievements and become defenders of order."

As early as last September, Lei Ping, deputy general manager of China First Automobile Group Co., Ltd., said at the TEDA Automotive Forum that the current prominent feature of China's auto market is "involution." He believes that blindly lowering prices will only make the industry lose the motivation for sustainable development.

The sales data behind these auto company executives who oppose "involution" are not optimistic.

According to the latest production and sales report of GAC Group, the automobile production in July was 156,800 units, a year-on-year decrease of 9.14%; the cumulative production from January to July was 1,016,200 units, a year-on-year decrease of 25.79%. In terms of sales, the sales in July were 141,200 units, a year-on-year decrease of 25.37%; the cumulative sales from January to July were 1,004,200 units, a year-on-year decrease of 25.83%.

GAC Toyota and GAC Honda, both subsidiaries of GAC Group, performed poorly in the passenger car market. GAC Toyota's cumulative sales from January to July were 389,600 vehicles, down 25.48% year-on-year; GAC Honda's sales in the same period were 241,200 vehicles, down 27.34% year-on-year. Faced with market challenges, GAC's joint venture brands had to resort to layoffs. At the same time, GAC Group's new energy sub-brand Aion's sales from January to July fell 39.21% year-on-year, and it is difficult to replace the "two Toyota" brands as the group's new profit pillar.

The situation of FAW Group is not optimistic either. The sales of FAW-Volkswagen and FAW Toyota in the first half of the year were 754,500 and 329,000 respectively, down 11.1% and 11.82% from the same period last year respectively. Great Wall Motors is also facing the problem of weak sales growth in the new energy vehicle market. Data show that in the first seven months of 2024, Great Wall Motors' total sales were 651,000 vehicles, a year-on-year increase of 3.6%, completing only 34% of the annual target of 1.9 million vehicles. Among them, new energy vehicle sales in July were 24,100 units, a year-on-year decrease of 16.51%; cumulative sales in the first seven months were 156,500 units, a year-on-year increase of 28.14%, but new energy vehicle sales accounted for only about 24%.

Regarding the "volume" phenomenon in the automobile industry, Zhang Xiang believes that this is a natural result of the survival of the fittest in the market and there is no need for excessive intervention.

Zhang Xiang pointed out that a market economy will inherently lead to waste of resources, which is an inevitable process of market competition, just like what the U.S. auto industry once experienced, where there were more than 1,500 companies initially, but only three were left through price wars and competition.

"In this process, the closure of enterprises and technological upgrading are inevitable, and we don't have to worry too much." Zhang Xiang said that even if the joint venture withdraws, it will not have much impact on China's auto industry, because China can produce not only new energy vehicles but also fuel vehicles. At the same time, he emphasized that the country has introduced policies to prevent price wars from causing a decline in automobile quality, but Zhang Xiang believes that there is no need to worry too much even if quality problems occur, because the country has a complete recall system to protect consumer rights.