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tencent auto "high beam"

author: guo yifei

editor｜liu peng

"september 10th is a good day." faced with a large number of competing products coming to the market, a person from the marketing department of a domestic brand car company told tencent auto's "high beam" with a wry smile.

in the mobile phone industry, huawei's three-fold screen mobile phone directly competed with apple's new iphone 16 series. in the automotive industry, the industry's internal competition has been pushed to a new height: led by huawei, volkswagen, saic, chery, gac, great wall, jiyue and other joint ventures and independent brands, their new cars have been launched one after another, totaling up to 8 products.

specifically, the new cars on the market include the aito m9 five-seater version, luxeed r7, volkswagen passat pro, jiyue 07, baojun yunhai, chery tiggo 8 plus, gac trumpchi e8+, and haval h6 classic edition. in addition, the new bentley flying spur will also be launched overseas for the first time. among the new domestic products, all models including sedans, suvs, and mpvs are covered, with prices ranging from 100,000 yuan to 300,000 yuan.

a market observer counted the launch conferences of tencent auto "high beam" in detail, and found that excluding the concentrated appearances at auto shows, the launch conferences in the past two years usually had about four cars launched in a day. in early march this year, there was a situation where seven cars were launched in one day. it is indeed rare to have eight cars launched this time.

compared to the development rhythm of mobile phone manufacturers who change models every year, in the era of fuel vehicles, models are often changed every two to three years, and only every five to six years. however, with the support of new energy technology, price wars are becoming increasingly fierce, and cars have gradually evolved from industrial products to electronic consumer products. the development cycle of new cars has been compressed to 12-18 months.zeekrthere was even an extreme case of "three generations of models sold in the same year".

"new energy vehicles have entered a stage of competing in rapid iteration capabilities, which is very different from traditional vehicles. not only zeekr, but other new energy vehicle companies will also accelerate their iteration speed in the future." zeekr ceo an conghui recently stated publicly.

according to statistics from icar intelligence, from january 2023, when this round of price war began, to june 2024, as many as 579 new chinese brand models were launched on the market, with 946 minor facelifts, 836 new models and 59 replacement models. these four data are significantly ahead in the global market.

calculated at this iteration speed, this means that chinese brand models have a minor facelift every 9 hours, a new car is launched every 10 hours, and a completely new model is launched every 15 hours.

although internal competition continues to intensify, as the overall growth of the domestic passenger car market has stagnated and the pace of oil-to-electric conversion is too fast, it has become more difficult for car companies to make money.

ping an securities recently reported that in the first half of 2024, byd, great wall, geely and other leading domestic automakers all achieved year-on-year growth in gross profit and net profit, and private automakers have stronger profitability resilience. but at the same time, state-owned automakers such as saic and gac, which previously relied on joint venture brands, saw a sharp decline in profits and even losses, and traditional luxury brands such as bba also saw their profits hit.

avoiding the chengdu auto show, new products are launched in large numbers, choosing to reduce prices and increase configurations

the just-concluded chengdu auto show encountered unprecedented cold reception, with a significant reduction in car company brand and product launches, and the auto show returned to its more pure attribute of selling cars.

according to official statistics, during the 2024 chengdu auto show, 926,200 visitors attended, higher than last year's 902,000. however, this did not bring more orders. this year, the number of sales vehicle orders was 33,600, and the total contract amount was 5.86 billion yuan, both figures lower than last year. in 2023, they were 35,000 and 6.087 billion yuan respectively.

a senior marketing executive of a joint venture car company explained to tencent auto's "high beam" that hosting auto shows is becoming less and less cost-effective. the various expenses such as renting venues, setting up booths, producing promotional materials, inviting partners, etc., start at at least tens of millions of yuan. even with so much money spent, it is not certain to make a big splash and it is easy to be drowned out by all kinds of traffic.

he believes that in order to avoid auto show schedules, many automakers choose to advance or delay the release of new products, which makes it easy for a large number of products to be launched on the market. september and october are traditionally the peak seasons for automobile sales, and naturally they are also the window period for automakers to launch their products. they are delivered as soon as they are launched, and they take advantage of the final sprint in the fourth quarter to achieve a wave of sales.

if you want to attract attention in the fierce competition, besides quickly updating products, price is naturally the core action.

tencent auto's "high beam" reviewed the above 8 new products and found that except for the small-order zhijie r7 and the wenjie m9 five-seat and six-seat versions which remained consistent, the final listing prices of the other 6 new products all dropped by 3,000 to 22,000 yuan compared to the pre-sale prices or products of the same level.

for example, in order to continue to maintain its position as the sales champion of b-class fuel vehicles, passat pro has chosen to reduce prices and increase configurations. the selling price is 159,900 to 223,900 yuan, while the current passat's suggested retail price is 181,900 to 243,300 yuan.

"once a joint venture car company chooses to lie down, it will never be able to stand up again. offense will be the only strategy for saic volkswagen. this choice will temporarily sacrifice some interests during the transition period, but what will be won is the future." during the chengdu auto show, fu qiang, the new general manager of saic volkswagen sales company, said that he must sit at the dinner table to eat the food, and not become the food on the table.

the jiyue automobile, jointly created by baidu and geely, is not to be outdone. the price range of its second product, the 07, is 209,900-299,900 yuan (limited time price 199,900-289,900 yuan), which is 16,000 yuan cheaper than the pre-sale price of 215,900 yuan. the car is also the first to be equipped with baidu apollo's advanced intelligent driving system asd, which adopts the "pure vision + end-to-end large model" intelligent driving solution.

last night's press conference was packed with people, including baidu's chairmanrobin li、chairman of catlzeng yuqun、niofounderli binall of them came to the stage to show their support, and li shufu, chairman of geely holding, also sent a congratulatory video. xia yiping, ceo of jiyue, even declared that "jiyue 07 is the world's first sedan with an investment of over 100 billion yuan.teslathe model 5 that hasn’t been built yet.”

automobile profit margin fell to 4.9%, and fuel vehicles entered a vicious cycle of price cuts

in july 2024, the penetration rate of new energy passenger vehicles in china exceeded 50% for the first time, reaching 51.1%. in august, the figure continued to hit a new high of 53.9%, which is ten years ahead of the official schedule.

however, at present, domestic automobile sales continue to be sluggish. according to the china passenger car association, in august 2024, the national narrow passenger car retail sales fell by 1% year-on-year, which has been declining for five consecutive months. the growth momentum of the industry mainly depends on exports.

although the cumulative retail sales so far this year reached 13.472 million, a year-on-year increase of 1.9%, the rapid pace of oil-electric conversion has not brought more profits. according to data from the national bureau of statistics, from 2017 to july 2024, the profit margin of the automobile industry has fallen from 7.8% to 4.9%. compared with the average level of 6.3% of downstream industrial enterprises in the same period, the automobile industry is obviously lower.

cui dongshu, secretary general of the china passenger car association, recently wrote that by 2024, the peak of new energy vehicle promotions will have risen by 7 percentage points and solidified into price cuts. "price competition is mainly about directly breaking through the lower limit of the original price, rather than increasing configuration without price cuts."

according to his statistics, by august 2024, the number of brands and models that have reduced their prices in the domestic market has reached 173, compared with 150, 95 and 62 in the past three years. among them, 71 fuel vehicles (including hybrid vehicles) have reduced their prices, with an average reduction of 11%; 63 pure electric, 26 plug-in hybrid and 12 extended-range models have reduced their prices, with reductions of 15%, 13% and 7% respectively.

the price war that has continued since 2023 shows no sign of stopping. fuel vehicles are profitable but sales continue to decline. most new energy vehicle companies have not achieved economies of scale and are still mired in losses. currently, only tesla, byd,ideal autothree new energy vehicle companies achieved profitability.

according to the financial report, nio, zeekr, xpeng, baic blue valley, and leapmotor are all in a loss-making state, with net losses of 10.38 billion yuan, 3.83 billion yuan, 2.653 billion yuan, 2.571 billion yuan, and 2.212 billion yuan in the first half of 2024, respectively. xiaomi's automotive business also lost 1.8 billion yuan in the second quarter. however, it is worth noting that from the perspective of month-on-month and year-on-year data, most of the above-mentioned new car-making forces have reduced losses to varying degrees.

in comparison, joint venture brands are suffering greater impact and are beginning to gradually withdraw from the chinese market.

the financial report shows that in the first half of 2024, the sales of saic-gm, gac toyota, and gac honda fell by 50%, 26%, and 28% year-on-year, respectively. the decline in sales directly led to a sharp decline in profits, and saic-gm's net loss reached 2.27 billion yuan. gac group's investment income from joint ventures, mainly gac honda/guangfeng, was 2.01 billion yuan, a year-on-year decline of 62.1%. affected by the decline in profits of joint venture brands, the net profits attributable to saic and gac group in the first half of the year fell by 6.45% and 48.88% year-on-year, respectively.

li bin, founder of nio, recently publicly stated that fuel vehicles have entered a vicious cycle and can only maintain market share by reducing prices, but price cuts will damage dealer profitability, brands and the residual value of used cars. the market share of pure fuel vehicles in china is entering an accelerated decline. japanese cars such as honda, toyota, and nissan are repeating the problems encountered by hyundai kia, ford, and gm in china in the past few years. "in two years, the penetration rate of china's new energy vehicle market will exceed 80%."

an executive of an independent brand car company group told tencent auto's "high beam" that the current core task is to ensure the growth of fuel vehicle sales first, and use this part of the profit to offset the losses of the new energy business. now the investment in new energy technology research and development has stabilized, and the two major costs of batteries and intelligent driving are also declining. once the scale effect of new energy vehicles starts to run, profitability will not be far away.

the price war in 2024 was first initiated by byd honor edition, and its own profits also suffered a certain degree of backlash. according to the financial report, in the second quarter, the revenue of each vehicle decreased by 19,000 yuan month-on-month to 135,000 yuan, and the company's gross profit margin also decreased by 3.9 percentage points month-on-month to 22.3%.

thanks to the scale effect and the month-on-month decrease of 1.6 billion yuan in r&d expenses, byd's net profit attributable to shareholders after deducting non-recurring items per vehicle in the second quarter increased by 2,700 yuan to 8,700 yuan month-on-month.