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our reporter liu zhao

against the backdrop of increasingly fierce competition in the luxury car market, bmw's sales in august were almost halved. data showed that in august, bmw sold only 34,800 vehicles in the chinese market, a 42% drop from the same period last year. recently, bmw decided to lower the prices of related models.

industry insiders interviewed by the securities daily reporter generally believe that bmw's return to the "price war" is affected by multiple factors, including the recent sales plunge, market pressure, the failure of the previous price increase strategy, and fierce market competition.

have to adopt price reduction strategy

bmw's latest financial report shows that in the first half of 2024, the total revenue of its automotive business was 63.009 billion euros, roughly the same as the same period of the previous fiscal year, while net profit fell to 5.656 billion euros, a year-on-year decrease of 14.6 percentage points. among them, in the chinese market, bmw's delivery volume fell to 376,400 vehicles, a year-on-year decrease of 4.3%.

regarding the decline in sales in the chinese market, bmw believes that in recent years, chinese local electric car manufacturers have risen rapidly in the field of electric vehicles, relying on their own advantages to continue to seize market share, forcing several european car brands including bmw to adopt price reduction strategies. in addition, in august this year, bmw's total sales in the chinese market have dropped sharply to 34,800 vehicles, nearly half of the approximately 60,000 vehicles in the same period last year.

looking at its competitors, mercedes-benz achieved sales of 49,000 vehicles in august, audi achieved sales of 47,900 vehicles, and "new force" brands in the domestic new energy vehicle field, such as ideal auto, also achieved sales of 48,000 vehicles.

bmw said in the announcement that it expects deliveries in fiscal 2024 to decline slightly year-on-year, while it had previously expected a slight increase; it expects the ebit margin to be between 6% and 7%, lower than the previous forecast of 8% to 10%, and significantly lower than the market expectation of 8.37%; the return on capital employed (roce) is expected to be 11% to 13%, also lower than the previous forecast of 15% to 20%.

an auto industry analyst who wishes to remain anonymous told the securities daily reporter: "bmw is currently in a dilemma. if it continues to be caught in a price war, it will undoubtedly erode its brand value and affect its profit margins. however, if it does not adopt an active pricing strategy, it will be difficult to effectively defend its market share, resulting in continued downward pressure on sales. this situation undoubtedly poses a severe challenge to bmw."

hot-selling models all have price cuts

it is worth noting that bmw's return to the "price war" also reflects the fierce competition in the automobile market. behind the "price war" is the fierce competition for market share and keen insight into consumer needs among major brands. however, price competition is not a long-term solution. how to maintain brand competitiveness in the "price war" and achieve breakthroughs in new technologies and new products will be the key issues that luxury brands such as bmw need to think about in the future.

under such circumstances, bmw has to re-examine its market positioning and competition strategy. although price cuts may squeeze the brand's profit margins, in the current market environment, it is an effective means to boost sales and maintain market share.

in recent days, reporters from the securities daily visited several bmw sales outlets in beijing and learned that the price cuts this time were quite large, with the flagship pure electric model i7, bmw 3 series and 5 series and other popular models all seeing price cuts to varying degrees. this series of price cuts is clearly intended to meet sales targets before the end of the year and make up for previous sales losses.

bmw's return to the "price war" is not only a quick response to market changes, but also a reflection and adjustment of its previous strategy. in the era of fuel vehicles, bmw has taken a leading position in the luxury car market with its excellent technology and brand influence. however, with the rapid development of the new energy vehicle market and changes in consumer preferences for car purchases, bmw is also facing unprecedented challenges. in particular, chinese new energy vehicle brands represented by ideal and wenjie have quickly occupied the market with their technological innovation and high cost-effectiveness, posing a threat to traditional luxury brands such as bmw.

"due to the increasingly stringent regulations on fuel vehicles in various countries and the intensified competition from emerging electric vehicle brands, bmw's manufacturing costs in china and europe have increased, further compressing its survival space and market share. these factors have jointly affected bmw's sales and stock price performance." zhang xiang, secretary-general of the international intelligent transportation technology association, told the securities daily reporter, "in the short term, bmw can increase sales and market share through price reduction strategies, but in the long term, it must strengthen the research and development and promotion of new energy vehicle models to adapt to the downward trend in fuel vehicle sales and maintain its market competitive advantage. although bmw has maintained a certain position in the luxury car market through a strategy of not reducing prices, this strategy is no longer feasible with the rapid rise and development of the new energy vehicle market."

zhang xiang believes that consumers will turn to new energy vehicles on a large scale in the future, so bmw should actively develop new energy vehicle products to fundamentally solve the challenges it faces and adapt to changes in consumption trends. "in order to meet the challenges, bmw needs to increase investment in new energy technologies, enrich its product lines, and adapt to the increasingly stringent global market environment."

the anonymous analyst further stated: "the sharp drop in sales in august forced bmw to return to the 'price war' to cope with market challenges. by lowering the prices of its models, bmw hopes to boost sales, maintain market share, and lay a solid foundation for future development. however, in this fierce market competition, whether bmw can successfully achieve its goals still needs further testing by the market and consumers."