with a subsidy of 10,000 yuan per car, is bmw returning to the price war?
2024-09-23
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after adjusting its business policy in early july this year, bmw recently adjusted its sales policy again.
according to information released by market information and consulting company jielandu, on september 12, bmw issued the "2024 bmw china and bmw brilliance mid-autumn festival and national day special discount policy" document to all dealers. this policy first affirmed that "the profitability of dealer partners has improved" after the announcement of withdrawal from the price war in july and august. at the same time, in order to further "solve the problems of dealer cash flow and profitability", a special mid-autumn festival and national day discount of 10,000 yuan per unit was given to the entire vehicle series.
this is also confirmed by the bmw business policy document obtained by the reporter of china business network. it should be pointed out that bmw has set a prerequisite for the additional sales discount of 10,000 yuan, requiring dealers to complete more than 80% (inclusive) of the overall retail requirements of bmw china and bmw brilliance in the third quarter of 2024. at the same time, the scope of vehicles subsidized by this policy is all retail vehicles in the second and third quarters of this year. the long traceability period and the number of vehicles involved have exceeded the scope of any conventional holiday special promotions.
a bmw dealer told the reporter that although it is nominally a special discount to subsidize dealers, in fact, bmw has set a threshold of 80% retail sales target. at the same time, dealers will strive to achieve a larger sales volume in order to get more subsidies. therefore, this business policy actually has the effect of hitting the sales target. most automotive industry practitioners interpret this business policy of bmw as "bmw's return to price wars."
according to jie lanlu's analysis, bmw's sales in the second quarter of this year were 188,700 vehicles, and its sales in the third quarter ending in august were 94,691 vehicles. referring to bmw's sales in the same period last year, assuming that 80% of the sales target in september is 69,000 vehicles, the sum of sales in the second and third quarters is 352,400 vehicles. then bmw's overall promotional expenditure this time will reach 3.5 billion yuan.
in early july 2024, bmw dealers' profitability declined due to the price war. bmw china introduced business policies to subsidize dealers' profits and encourage dealers to operate in a healthy manner.
after the introduction of the business policy, bmw 4s stores raised the prices of many models, including the bare car price of bmw i3 (edrive 35) to 237,000 yuan, an increase of nearly 40,000 yuan compared to the lowest bare car price of 190,000 yuan in june. the terminal price of the bare car of bmw ix3 low-end was 282,000 yuan in july.
by september, bmw dealers once again started the price-for-volume model. "the new model is about to be launched, and the bmw i3 is out of stock in the store. the current price of the bmw ix3 is 240,000 yuan." a sales consultant at a bmw 4s store told reporters that the store adjusted the prices of many models before the mid-autumn festival. compared with the price reduction of many models in july, the store is expected to continue this preferential price until the national day, and other preferential activities may be launched during the national day.
the above sales consultant said that in july and august, the manufacturer adjusted its sales policy, and the resources of cars in 4s stores generally became less, and the discounts were reduced. at that time, almost all models were increasing in price. around the mid-autumn festival, the store began to adjust its discount policy, and the terminal price discounts of some models were similar to those in june this year.
according to the monitoring of the terminals at jie lan road, the terminal discounts of bmw models have exceeded the discount level in june since august, and even more so this month. from june to september this year, the discounts of bmw 3 series were 27.3%, 22.9%, 29.7% and 30.1% respectively; the discounts of bmw 5 series were 21.6%, 16.5%, 26.6% and 27.3% respectively; the discounts of bmw i3 were 42.3%, 37.3%, 44.8% and 44.8% respectively; the discounts of bmw ix3 were 39.7%, 35.3%, 40.6% and 40.6% respectively.
a sales consultant at another bmw 4s store told reporters: "when you enter the store, you will receive a gift package. our store is currently doing the biggest promotion of the year. if you pick up a car this month, you can get an immediate discount of 2,000 yuan."
it is worth noting that after the adjustment of the business policy in july, bmw's sales have declined. public data shows that in august this year, bmw's sales were 35,000 vehicles, a year-on-year decrease of 42%, while mercedes-benz's sales were 50,000 vehicles and audi's sales were 48,000 vehicles.
at this year's half-year earnings conference, bmw lowered its full-year performance forecast, predicting that deliveries in fiscal 2024 will decline slightly year-on-year, while it had previously expected a slight increase; the ebit margin is expected 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%.
regarding the decline in sales in the chinese market, bmw believes that in recent years, china's local electric vehicle manufacturers have rapidly risen in the field of electric vehicles and have continued to seize market share by relying on their own advantages, forcing several european car brands including bmw to adopt a price reduction strategy.
(this article comes from china business network)
