In January this year, Tesla took the lead in "leading the war" and set off a wave of price cuts in China's new energy vehicle market through "bloodletting". In March, the French gentleman Citroen directly "lifted the table" and sacrificed 120,000 yuan of C6 and 50,000 yuan of C3-XR, which made the market and consumers boiling, and even the car companies were crazy, and they took out 100 million yuan subsidies, tens of billions of subsidies and other preferences, proving with practical actions that they have entered the war. Up to now, more than 40 car companies and nearly 100 models have participated in the "fire sale", with the range of fire sales ranging from several thousand yuan to more than 100,000 yuan.
All car companies cut prices, and some people "buy one get one free"
This price reduction tide can be described as unexpected, and the scale of price reduction and the wide range of brands involved are basically unprecedented. The specific reason is that in early March, Hubei Province in order to drive the local economy, a number of car companies in the joint jurisdiction opened a new round of price reduction promotions, in this event, Dongfeng Motor Group, which sits in Wuhan's home field, naturally responded most positively, so it launched the "fractured" C6 and C3-XR and other models, so that the original 4S store became explosive, and the inventory cars were instantly out of stock.
Some netizens ridiculed that the 210,000 Citroen C6 is all problems, and the 120,000 C6 is flawless, even if there is a problem, it is their own problem.
Affected by the promotion of Hubei Province and Dongfeng "smashing the field", various automobile brands have also taken action. On March 8, China FAW launched the "Flag Benefit Jilin - 100 Million Yuan Limited Time Benefiting People" campaign for consumers in Jilin Province. The scope of this subsidy covers all autonomous and joint venture brand passenger cars and light goods vehicles under China FAW, with a total subsidy of 150 million yuan, and a maximum subsidy amount of 37,000 yuan for bicycles.
Immediately after, Changan Automobile Group, SAIC Motor Group, Chery Automobile Group and other group car companies, as well as individual brands such as Qianjie and Beijing Hyundai also followed. Among them, Changan Automobile issued the "10 billion Huimin car purchase season" policy, all users who pick up their cars between March 1 and March 31 (purchase any model of Changan passenger car) can enjoy additional 1,000 yuan car coupons; At the same time, Changan Automobile will provide cash subsidies to users in accordance with the corresponding policy standards for relevant automobile consumption subsidies issued before April 30.
SAIC Motor has not only launched special preferential activities covering Roewe, MG, Buick, Cadillac and other brands in Hubei Province, but also launched a nationwide subsidy campaign for the entire Chevrolet series, with consumers enjoying subsidies of up to 70,000 yuan.
Chery Automobile Group also released the "Ten Billion Benefiting People Car Purchase Season" activity, involving brands including Chery, Jietu, Chery New Energy, etc., with a maximum subsidy of 42,888 yuan.
In addition to independent brands, joint venture brands and some second-tier luxury brands, BBA is also a little "unable to sit still". According to Chinanews.com, the current discount range of Mercedes-Benz C-class and E-class models is about 60,000-70,000 yuan; BMW 3 Series and 5 Series are about 10 "points"; Audi A4, A6, Q5L and other models are also between 60,000 and 70,000 yuan.
What's more, in order to attract the attention of consumers, some 4S stores have launched "buy one get one free" promotional activities, including buying Loulan to give away Xuanyi, buying Haoying hybrid version to give Fit, buying bZ4X to give Vios, etc. It can be said that the entire Chinese car market has "killed crazy", and the era of "tens of billions of subsidies" belonging to the Chinese auto market has also arrived.
What is the "suicide" price reduction of car companies?
However, behind the "suicide" price cuts of many car companies, we also see some helplessness and industry worries that belong to them. According to sales data from the Passenger Association of China, from January to February this year, the retail sales of passenger cars in mainland China were only 2.678 million units, down 19.8% year-on-year, of which January fell to the historical "new freezing point", down 37.9% and 40.4% respectively year-on-year. In this context, it is indeed difficult for car companies to survive.
On the channel side, dealers are also under a lot of pressure. According to the "China Automobile Dealer Inventory Early Warning Index Survey" of the China Automobile Dealers Association, the inventory warning index of mainland auto dealers in January 2023 was 61.8%, up 3.5 percentage points year-on-year and 3.6 percentage points month-on-month; the inventory early warning index in February was 58.1%, up 2.0 percentage points year-on-year and down 3.7 percentage points month-on-month, both above the boom-dry line, indicating that the auto circulation industry is in a recession range.
If the car cannot be sold, the dealer's funds cannot be returned, and it is difficult to complete the sales tasks set by the manufacturer to get the rebate, so the pressure will only increase. At the same time, the upcoming China VI B emission standard on July 1 is also considered by many to be the "straw" that overwhelms the brand, which directly led to this "dumping". According to online news, the mainland currently has about 6 million fuel vehicles in stock, and once the National VI B emission standard is implemented, these inventory vehicles will not be able to be licensed, which is one of the reasons why many car companies "dump goods".
However, it is understood that the current news that after the implementation of the China VI B emission standard, the China VI A model will not be listed has not been confirmed by the authoritative department. At the same time, some insiders said that the implementation of the National VI B emission standard has no impact on most car companies, because the cost of China VI A and China VIB is similar, and most car companies are also one-step research and development of China VI B products.
Moreover, the increasingly popular new energy vehicles in recent years, especially the rise of plug-in hybrid, hybrid and extended range power models, is also widely regarded by the outside world as the "catalyst" for this price reduction, because the fuel vehicle market is shrinking year by year, and car companies are facing the transformation to the new energy track, so it has become a logical thing to go to fuel vehicle inventory.
Of course, it is certainly difficult to complete this task with the major car companies alone, mainly because they cannot afford subsidies, so local governments also take this opportunity to stimulate the local economy and achieve a win-win effect of "consumers, car companies, and localities".
Liu Tao, director of the automotive division of Beiqing Media, said: "This price reduction subsidy is actually mainly funded by local governments, which is a means to stimulate consumption and drive the economy in disguise, because most car companies have a state-owned background behind them, and the amount of subsidies for car companies is not large in essence." ”
Whether the "heating up" of the car market is good or bad is still unknown
However, opinions in the industry are polarized on whether the "heating" of the car market is good or bad, whether it stimulates the market or overdrafts the market. Among them, Cui Dongshu, secretary general of the Passenger Association of Passenger Association, believes that the unprecedented preferential car purchase subsidy policy of enterprises and the government shows the determination of the automobile province to stabilize and promote automobile consumption. These subsidy policies are exemplary and are likely to be followed by other provinces.
Chen Shihua, deputy secretary-general of the China Association of Automobile Manufacturers, said: "Adopting a simple price competition strategy is not a long-term solution, enterprises should take a long-term view, actively follow the wave of 'new four modernizations', launch products in line with the trend of industrial development to carry out healthy market competition, and make more efforts in product technology, quality, service, brand power and other aspects." ”
In addition, a number of industry veterans also said: "Although such a sharp price reduction has brought a surge in sales, in the long run, it will be harmful to the car company itself, the brand, the market, second-hand cars and many other aspects." ”
In fact, the harm of this "price war" has gradually emerged, on the one hand, the price balance of second-hand cars and new cars has been broken, a large number of second-hand car dealers want to cry without tears, and the second-hand cars received before can only lose money and sell them; On the other hand, consumers who have previously purchased cars are also dissatisfied and have great opinions on the brand. In addition, the "sequelae" of this price cut have also been transmitted to the stock market, causing a huge shock in auto stocks. It is understood that on March 10, auto stocks in the A-share and H-share markets fell sharply, and many stocks fell by more than 5% in a day. Some netizens described it this way that the subsidies enjoyed by the automobile market are paid by shareholders.
In addition, for the new automakers who have not yet made a profit, if the price reduction tide continues after March, their price system will also be affected to a certain extent, and it will be more difficult tomorrow.
In the short term, the "Double 11" of the car market will undoubtedly play a great role in stimulating consumption, boosting the local economy, and alleviating the pressure on manufacturers and dealers. But in the long run, endless "price wars" are certainly not a long-term solution, because car companies cannot survive without making money or pouring money, nor can they consistently invest in research and development, so that consumers may eventually suffer. Therefore, we expect to see a benign competition in the car market, not a car market that "self-harms" price reduction at every turn, and this way of surviving after death is likely to be nine deaths.