2024-10-05
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who would have thought that bmw, which was once "cold", would be given a solid lesson by the chinese market.
in recent days, there have been media reports that bmw terminal discounts have returned to the market. among them, bmw’s flagship pure electric model i7 (2023 xdrive60l, originally priced at 1.459 million yuan) has seen a domestic price cut of up to 511,000 yuan, and its current price has dropped to 948,000 yuan. at the same time, bmw's best-selling models 3 series and 5 series also have significant price adjustments.
this may mean that bmw’s high-profile declaration of withdrawing from the price war two months ago is being crushed by reality. in response to this situation, bmw china stated that competition in the chinese automobile market will further intensify in 2024, and almost all brands will face the same challenges. however, bmw has not made any recent adjustments to the suggested retail price. authorized dealers independently determine the retail price based on market conditions, and the final transaction price is affected by specific transaction conditions.
even though bmw has not directly admitted that it will join the price war again, it is an indisputable fact that the terminal price has dropped again.a few days ago, many media bloggers investigated the front-line sales of bmw and other cars and found that it was true that bmw did not adjust the recommended retail price. it was also true that some dealers lowered prices on their own in the face of pressure.
the differences between manufacturers and dealers show that china's luxury car market has changed. you must know that a few years ago, disguised price increases were the default operation of first-line luxury car dealers such as bmw, mercedes-benz, and audi. there were numerous tactics such as adding high-priced decorations, compulsory insurance, lengthening the waiting time, and illegally charging loan fees. at that time, bmw officials also turned a blind eye.
as the penetration rate of new energy passenger cars in china has exceeded 50%, and under the impact of the rise of many independent brands such as byd, wenjie, ideal, and nio, traditional luxury car dealers have shifted from selling at high prices to buying at low prices. it's hard to get the rod any harder. the acquiescence of car companies to dealers' price cuts is also a kind of helplessness.
sales crush "luxury" filters
to understand bmw's "changing orders every day" in the price war, we have to mention the shrinking sales volume of bmw in china.
this year, when bmw took the initiative to withdraw prices in july, it stated that it would pay more attention to the healthy development of its business in the second half of the year and help dealers achieve steady growth. but the actual situation is that after bmw actively participated in the price war for more than a year, it has not substantially boosted bmw's sales. on the contrary, it consumes the brand value and greatly compresses the profit margin of dealers. bmw, which could not afford to beat the competition, decided to exit its anxious state and turn to a strategy of guaranteed prices and profits.
reality taught bmw a hard lesson, and the sales fell unexpectedly. data shows that in august 2024, bmw sold only 34,800 vehicles in china, a sharp decline of 42% from the same period last year, becoming the largest decline among bba brands. in comparison, audi sold 45,600 vehicles in august, a year-on-year decrease of 19.4%; mercedes-benz sold 48,700 vehicles, a year-on-year decrease of 16.5%.
obviously, bba is having a hard time. just surpassing its old rivals in the decline list, bmw can't hide its embarrassment. facts have proved that the price war atmosphere in the chinese market does not mean you can quit just because you want to. car companies and dealers that once firmly controlled the pricing power of the luxury car market are recognizing the reality. the current and future market pricing power has changed hands.
this round of price war is the best proof. in 2023, tesla took the lead in provoking a price war, followed by brands such as byd and ji krypton, and multiple rounds of price cuts followed in the market. in the atmosphere of price reduction, luxury brands such as bba (bmw, mercedes-benz, audi) cannot stay away, and the prices of terminal models also continue to fall.
according to statistics from investment institutions, 2021 is the peak of the average transaction price of the bba brand. the average transaction prices of mercedes-benz, bmw and audi are 464,000 yuan, 461,000 yuan and 337,000 yuan respectively. times have changed, and by april 2024, these figures have dropped to 434,000 yuan, 351,000 yuan, and 301,000 yuan respectively.
without price increase, bmw's "luxury car filter" was completely crushed by the chinese market. it is particularly worth mentioning that bba’s electric vehicles are even labeled as “no-brand” by some netizens.
public information shows that in the first half of 2024, bmw china (including the bmw and mini brands) cumulative sales were 375,900 vehicles, a year-on-year decrease of 4.2%; mercedes-benz sales were 352,600 vehicles, a year-on-year decrease of 6.5%; audi sold 320,400 vehicles , a year-on-year decrease of 1.9%.
in sharp contrast to the decline of bba, the sales of independent luxury brands are soaring. data shows that li auto delivered a total of 189,000 vehicles in the first half of 2024, a year-on-year increase of 36%; wenjie's cumulative sales reached 181,000 vehicles, a surge of 664%; nio also delivered 87,400 vehicles, a year-on-year increase of 60%. newer brands such as denza, xiaomi, and jikrypton are also growing at an alarming rate.
"can't beat, can't escape" is a true portrayal of bmw's current predicament.under the traditional sales model, even if bmw relaxed the rebate threshold for dealers and canceled requirements such as financial penetration rate and secret procurement assessment, life for dealers is still difficult. in june 2024, senfeng group, the largest car dealer in yancheng, jiangsu province, exposed the news that the capital chain was broken. the group represents more than 20 brands including bmw, audi, mercedes-benz and lincoln.
the fourth quarter is about to enter. in order to achieve annual goals and get rebates to survive, it is understandable that bmw dealers are rushing to cut prices.
the missing "big brother"
to understand the decline of bmw in china, we have to start with the glory of bmws.
"ride a mercedes-benz and drive a bmw" is the simplest understanding of luxury cars among chinese people after the reform and opening up. with the rapid development of all walks of life during the reform and opening up, a batch of "big brothers" who got rich first paid first and then invested in the embrace of bba.
bmw, in particular, is known as the first car on the road to wealth. more than ten years ago, there was a poll on the tianya forum on which brand of car would you choose after making money. among the choices were bmw, audi and mercedes-benz. 81% of netizens voted for bmw.
perhaps the brand name bmw is more in line with the chinese traditional concept of "a hero accompanying bmw". intentionally or unintentionally, bmw has become the enlightenment teacher of luxury cars for the chinese people. in the tv show "if you are the one", a female guest commented that she was "crying while sitting in a bmw." li xiang, the founder of ideal, also drove a bmw more than ten years ago.
at that time, in the eyes of many people, labels such as "nouveau riche" and "flagrant personality" were also used by luxury cars such as bmw and land rover. looking at the overall background, the driving force for bmw's explosive performance in china is the wealth creation trend in traditional industries after the reform and opening up.
whether it is a factory owner on the southeast coast, a major foreign trade player, an engineering veteran with complex social relationships, or a mine owner or real estate developer. these "big brothers" who are closely related to the last economic boom era have chosen bmw in the past 20 years.
but now, china's economy has shifted gears. the new rich come from emerging industries such as the internet, live short videos, technology, new energy, biology, and knowledge payment. their aesthetics and tastes are very different from those of the previous era.this class is more inclined to environmentally friendly technology for autonomous driving, rather than the stacking of solid wood, leather, chrome-plated metal strips. the definition of luxury has changed, how can bmw not fall out of favor.
the new "big brother" is not catching a cold, and the old "big brother" is also disappearing. bmw's previous user base is also disappearing with the times, and the shrinkage of the real estate, foreign trade, factory and infrastructure industry has also made the former big brother no longer proud. some people disappeared, while others used the slogan of technological patriotism to switch to new power brands such as "questioning the world" and "ideal". from spending millions on luxury cars to buying smart cars worth 500,000 yuan, the "big brothers"' consumption upgrade has been protected by technology and patriotism, which makes them look reasonable.
in the face of the general trend, bmw's efforts in the price war are somewhat futile. in the current transformation of the old and new economies, the disappearance of bmw’s “big brothers” is irreversible.
faith price double collapse
returning to the product perspective, the main products of bmw and other luxury cars are still fuel vehicles.
unfortunately, the chinese market, this track is collapsing. this week, the bidding price of hangzhou fuel license plates was just over 1,000. you must know that the price of hangzhou fuel license plates previously was as high as tens of thousands. similarly, in shenzhen, the price of fuel license plates also plummeted to 20% of the previous level. this shows that residents in china’s first- and second-tier cities are abandoning fuel vehicles. the new energy penetration rate mentioned above also supports this phenomenon.
it’s not just the belief in fuel vehicles that has collapsed, but also the price system for fuel vehicles.in the past decade or so, joint venture brands have seized pricing power in the chinese market through their market influence and established a relatively stable price system. for example, a-class cars are usually priced between 100,000 and 200,000 yuan, b-class cars are in the 200,000-yuan range, and c-class cars are around 300,000 yuan. at the same time, the size and performance of the three categories of vehicles are basically determined, and there is a tacit understanding of product design and positioning among joint venture vehicles.
but with the advent of the new energy era, this stable system has been completely broken. the performance of an electric vehicle priced at more than 100,000 yuan can far exceed that of a million-level fuel vehicle. without complex mechanical systems, the boundaries between abcd-class cars have begun to blur, and what is even more blurry is the price. among them, the most exaggerated thing is that byd can sell b-class cars for less than 100,000 yuan, and at the same time, its performance and fuel consumption are even higher than those of joint venture cars. in the field of luxury cars, various black technologies for autonomous driving are emerging in an endless stream. once optional on d-class cars, refrigerators, tvs, and massage seats have become standard equipment on cars priced between 200,000 and 300,000 yuan.
to use the words of a friend in the investment circle to describe china's new energy vehicles as "rebeling tiangang", the winter or even the end of joint venture fuel vehicles is already looming.
for bba, represented by bmw, the lag in new energy and smart driving is also an important source of crisis. most of their new energy models are "oil-to-electric" products, which only convert power forms based on fuel models without conducting comprehensive design iterations based on the characteristics of electric vehicles. the bulge in the rear row of the bmw electric car is the best footnote. compared with its big brothers in the previous era, internet social media has made chinese consumers more rational and savvy.
at present, chinese consumers believe more in the autonomous driving of brands such as tesla and wenjie, and are not willing to listen to an unsupported luxury title. coupled with the strong entry of mobile phone manufacturers, manufacturers that originally played in the technology brand were unable to achieve their goals.mobile phone manufacturers' inherent advantages in user base, vehicle systems, update frequency, and smart driving add to bmw's crisis opportunities. the barbarians from the "machine circle" are breaking in.
in the past few decades, bmw and its dealers have taught countless lessons to chinese consumers, and chinese consumers have also paid countless tuition fees. now it is finally the turn of the chinese market to teach bmw how to do things. it's just that for bmws, the content of this class may be too heavy, as it is a matter of victory or defeat, as well as life and death.