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at present, i think only tesla and bmw can freely move between price reduction and price increase.

but the difference between the two is that compared to the looseness and freedom of tesla's price switch, bmw seems a little cramped.

on september 20, media reported that bmw is restarting a price war because its sales have declined after the price increase in july, and is now gradually lowering the prices of its models in order to achieve its sales target in 2024.

it is reported that the price of bmw's flagship pure electric model i7 has been reduced by 38% in many 4s stores in china, with the highest reduction reaching 555,000 yuan, and the price of the bare car has reached 663,300 yuan. however, bmw had previously withdrawn from the price war in july and raised the prices of many of its models, especially the bmw i7, which had previously been significantly reduced in price.

industry analysts said that bmw's return to the price war was mainly affected by multiple factors such as recent sales fluctuations, market pressure and fierce market competition. the return to the price war was to seize the market window period.

on september 24, bmw china finally responded to the recent rumors of "returning to price war" in the industry. a person from bmw china said: in 2024, competition in the chinese auto market will further intensify, and almost all brands will face the same challenge. however, bmw has not made any adjustments to the suggested retail price recently. authorized dealers independently determine the retail price based on market conditions, and the final transaction price is affected by the specific transaction situation.

the above response reveals two pieces of information: first, bmw officially denies official price reduction; second, it gives dealers the authority to reduce prices to a certain extent.

different from its previous high-profile "exit from price war", bmw's strategy for adjusting vehicle prices this time is slightly milder.

advance and retreat, "price increase" against the trend

why is the industry so concerned about bmw's pricing strategy?

this is mainly because, as the penetration rate of new energy vehicles increases day by day, in the early stage, the car companies that were most affected were still mainly joint venture car companies with low-end prices. today, the situation is very different.

after fierce competition in the mid- and low-end markets, new energy vehicles have been rapidly penetrating the high-end market in a "bulldozer" manner. high-end luxury car brands, mainly bba, are all "threatened" to varying degrees, especially in the chinese domestic market, where foreign-funded car companies are increasingly feeling a sense of crisis.

for example, official data show that in the first half of this year, bmw's global sales totaled 1.096 million vehicles, a year-on-year increase of 2.3%, but in the chinese market it fell 4.2% year-on-year to 375,900 vehicles.

coincidentally, in the first half of this year, mercedes-benz's global sales volume was 1.168 million vehicles, down 6% year-on-year, of which sales volume in the chinese market was 341,500 vehicles, down 9% year-on-year.

faced with this downturn, bba has to reduce the price of its vehicles to varying degrees and enter the consumer market with a more "low" attitude. their purpose is the same: at least to maintain sales first.

in the first half of this year, bmw gradually took the initiative to approach the price war "storm". at the end of may this year, an automobile blogger wrote that bmw sent a letter to all dealers and stores, saying that in view of the market background and the huge impact brought by domestic brands, it decided to open a number of substantial subsidy reduction policies for bmw 4s stores, aiming to help dealers cope with short-term difficulties and ease business pressure.

image source: weibo screenshot

subsequently, some media reported that the prices of many bmw models dropped sharply and can now be purchased for less than 200,000 yuan.

in an instant, the automobile consumer market was filled with laughter and joy, and many people were grateful to the domestic new energy vehicles for allowing them to buy luxury cars at a lower price.

but the market's cheers hurt bmw's heart and made the automaker realize that price cuts can only maintain sales temporarily, but in the long run they will inevitably damage the brand value.

therefore, at the end of june this year, bmw gradually stopped its price reduction behavior.

until july, there was news that bmw decided to quit the one-year-long “price cut to maintain market share” and change to “reducing volume to stabilize prices”. on july 12, bmw china responded that in the second half of the year, bmw will focus on business quality in the chinese market and support dealers to make steady progress. influenced by this, bmw dealers have reduced terminal price promotion efforts and raised the price of each vehicle.

however, the sales of bmw's vehicle products in the chinese market do not seem to be optimistic after the price increase.

image source: bmw china

according to the sales data for july released by the china passenger car association, bmw i3 sales in that month were only 4,083 units, a 41% drop from 6,952 units in june. in august this year, bmw china's total sales were only 34,800 units, a 42% drop from the same period last year.

in other words, after the price increase, bmw faced an even greater dilemma of declining sales in the chinese market.

who is "harvesting" the market?

the industry has always been concerned about bmw's price hike after price cuts. after all, the only car company that can "jump back and forth" like this is tesla. most people are very curious about bmw's considerations.

during the chengdu auto show in early september, when talking about the price issue that the outside world is concerned about, gao xiang, president and ceo of bmw group greater china, said: "the current price war is unhealthy and unsustainable for automakers, consumers and dealers."

we will not make any judgment here on whether it is unhealthy for consumers, but what is certain is that price wars are indeed "unhealthy" for car manufacturers and dealers.

as an automobile manufacturer, bmw has suffered a certain degree of "backlash" from the price war.

according to bmw's financial report, 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.

in other words, the price war did not bring substantial sales growth to bmw. moreover, the “price cut to maintain market share” led to serious losses in stores, and dealers were also implicated to a certain extent.

image source: bmw china

what is even more interesting is that bmw’s price reduction has “benefited” its competitors to a certain extent.

when bmw gradually withdrew from the price war in july this year, mercedes-benz and audi in the bba camp followed suit. even many joint venture car companies were shaken to varying degrees. for example, volkswagen, toyota, honda, volvo and other brands have decided to adjust their terminal policies from july, reduce terminal discounts, or stop further price cuts.

but it is worth noting that at that time, it seemed that only bmw itself was serious about "withdrawing from the price war".

in reality, only bmw has actually increased its prices, while other brands have not increased their prices much. this means that after the "serious" price increase, bmw has given up more market share to its competitors.

data shows that in august of this year, mercedes-benz china's passenger car sales were 49,506 units, a decrease of 0.13% month-on-month; audi china's sales were 47,900 units, a month-on-month increase of 5.90%.

in contrast, as mentioned above, in august this year, bmw's total sales in china were only 34,800 vehicles. it should be noted that before that, bmw's sales ranked first among the bba camp. in other words, bmw's withdrawal from the price war has made mercedes-benz and audi the biggest winners.

image source: bmw china

coincidentally, when bmw began to gradually withdraw from the price war in july, the attitudes of some joint venture automakers became even more "ambiguous."

on july 22, gasgoo noticed that in response to the recent news circulating in the industry that "gac toyota will follow the strategy of luxury fuel brands such as bmw to withdraw from the price war and stop reducing prices", a person from gac toyota responded to the relevant media: "the official has never said that it will withdraw from the price war."

the person also said that although gac toyota models were accidentally involved in this bmw incident, they will still have preferential prices, but the preferential prices tend to be stable.

at that time, gasgoo analyzed that as to whether a large number of joint venture automakers would choose to completely withdraw from the "price war", judging from the current situation, the answer might be more of a no.

now it seems that what he said hit the nail on the head.

"golden september and silver october", make a great effort

at the same time, not only luxury car brands, but also domestic high-end new energy vehicle brands are frantically seizing space in the high-end car market during this period.

according to terminal sales (insurance volume) data, china's automobile terminal sales reached 1,936,766 units in august, up 9.4% month-on-month and up 0.9% year-on-year. this is the first time that the chinese automobile market has achieved a slight year-on-year growth after six consecutive months of year-on-year decline.

among them, the terminal sales of new energy vehicles exceeded 1 million for the first time, reaching 1,011,360 units, up 14.3% month-on-month and 49.8% year-on-year, with a penetration rate of 52.2%. in august, china's new energy vehicle sales and penetration rate both hit record highs.

ideal auto is one of the more outstanding high-end new energy vehicle brands.

on september 24, li auto's u.s. stock price rose 7.48% to $23.8 before the market opened. in the chinese auto market data just released for the week of september 16 to 22, li auto continued to consolidate its leading position among china's new power brands with sales of 12,000 vehicles. at the same time, it also surpassed mercedes-benz, bmw and audi, which have long dominated the luxury brand field, for the first time, and was second only to the industry giant tesla.

some industry analysts predict that ideal auto's deliveries in september may once again exceed 50,000 vehicles.

obviously, bmw tried to cause a small wave of "exiting the price war" in the luxury car camp by raising prices, but it ultimately backfired. nowadays, the discourse power of the chinese auto market has been controlled by chinese automakers. bmw's withdrawal from the price war alone has not even caused any ripples, and it has immediately counterattacked itself.

perhaps this is one of the reasons why bmw stated at the end of september that authorized dealers would independently determine retail prices based on market conditions.

image source: bmw china

in addition, the reason why bmw allows dealers to set their own prices at this time may also be due to the key time node factor. the "golden september and silver october" have always been the most prosperous days in the auto market, and it is also an important period for auto companies to achieve their annual sales targets.

gasgoo noticed that since september, major automakers have launched new cars in a rush to boost sales and achieve their annual sales targets. according to incomplete statistics, at least 40 new models, either brand new or modified, or new models have been launched on the market. this is almost the month with the most new cars launched except during auto shows, and the auto market seems to be unusually lively.

on september 20 alone, eight new cars from eight automakers were launched into the market, including the zeekr 7x, byd z9gt, deep blue l07, elf #5, bingo suv 5-seater version, the new jetour monkey king, ruiqi 6 pro, and the all-new grand cherokee, with prices ranging from 70,000 to 500,000 yuan.

it is not difficult to see the "ambition" of some car companies trying to sprint into the high-end market. for example, the denza z9gt, priced between 300,000 and 400,000 yuan, has taken on the task of byd's continued upward trend.

when sales were overtaken by audi and mercedes-benz, coupled with the intensive launch of new cars in september, automakers were rushing to sell high sales. under the pressure of full-year sales performance, it was reasonable for bmw to allow dealers to adjust prices appropriately according to market conditions.

so, will bmw’s subsequent pricing strategy be “lowering” or “increasing”?

a salesperson interviewed by the media said: "the recent price reduction is because we are under great pressure to meet the end-of-month quota, so the discount is large and the price will be reduced. now the quota has not been met, so we will do it if the price is close enough. another reason is that the i3, 3 series and other models are currently clearing out the inventory. when the new models are released in october, the prices will not be so low."

in other words, bmw will adjust the price of its vehicles in due course according to the pace of new product launches, inventory conditions and sales targets. but it should be noted that consumers, who are "educated" by the price war, will not have the patience to observe and weigh the options. after all, there are too many car brands to choose from in the market, and there are countless cost-effective vehicle products.

as cui dongshu, secretary-general of the china passenger car association, said, the current price competition in the automobile market is mainly about directly breaking through the original price lower limit, rather than the "increasing configuration without lowering prices" model. this does not actually have a significant effect on promoting sales in the short term, especially when prices are unstable, and consumers are particularly wait-and-see.

as for whether the price war will put bmw in trouble, in the short term, bmw is indeed in a dilemma. when sales and brand value are placed at the two ends of the scale: if it goes to the left, the brand value will be damaged; if it goes to the right, sales are indeed worrying.