Car companies cut prices in December, I advise you to wait

"I bought it, 23 Audi A4L luxury and dynamic models, landing 260,000 in installments. In the Audi car friend group, a message from a car friend who had just ordered a car stimulated the sensitive nerves of the car rider who picked up the car at the beginning of the year, "I bought 22 models of 40 fashion and dynamic models in March, and I spent 305,000 yuan on the whole amount!"

Buying a car at different times and in different places is not new. But at the end of the year, there are indeed many models on the market that have ushered in a good time to buy a car.

At the last moment when car companies hit their sales targets at the end of the year, the price war was once again offered. Most of the price cuts of traditional car companies such as Audi are quietly carried out at dealer terminals, and the official price reductions mainly for new energy models will also "make a comeback" at the end of 2023.

According to incomplete statistics, in December 2023, nearly 20 car companies officially announced that they would reduce the guide prices of their models again. This price war, which was first launched by Tesla at the beginning of the year, has been fiercely fought until the end of the year.

The price war has indeed led to an increase in the overall sales of the auto market. According to data from the China Association of Automobile Manufacturers, in the first 11 months of this year, the growth rate of automobile production and sales was about 10%. According to the China Association of Automobile Manufacturers, it is expected that the automobile market will continue to improve in December, and the phenomenon of "tailing" at the end of the year will be repeated. Automobile production and sales are expected to hit a record high for the whole year, exceeding expectations to achieve the annual forecast target.

Under the coercion of the price war, behind the comprehensive sales that have been rising all the way, those car lovers who exclaimed "I bought it early again, no longer dare to look at the car price" after picking up the car, and the helplessness of some car companies to sacrifice profits to seize the market should also be seen.

Is exchanging price for volume a long-term plan for the development of the auto market?

Price for quantity, last fight

This round of year-end price cuts covers a wide range of joint venture brands, luxury brands and independent brands. Whether you're aiming for a full-year goal or looking to achieve higher growth targets, the end of the year is a critical juncture.

North and South Volkswagen, which once took turns to sit in the top spot in China's auto market, not only opened the year-end preferential mode of its new energy models, but also made significant concessions for fuel vehicles.

Specifically, SAIC Volkswagen ID.3 discount is 43,000, ID.4X discount is 70,000, and ID.6X discount even reaches 75,000. On the other hand, FAW-Volkswagen also has a discount of about 68,000 yuan for the ID.4CROZZ and ID.6CROZZ.

Image source: SAIC Volkswagen

SAIC Volkswagen also officially announced a preferential policy for more models on December 4. According to the news, from now until December 31, 2023, the purchase of Tourang, Lavida, Tuyue, Passat, Tiguan L and other models can enjoy comprehensive preferential policies, with a maximum comprehensive discount of 58,000 yuan. Among them, the maximum comprehensive discount for the purchase of the Touron is 58,000 yuan, the maximum comprehensive discount for the purchase of the 2024 Lavida is 30,000 yuan, the maximum discount for the purchase of the Tuyue is 38,000 yuan, the maximum comprehensive discount for the purchase of the Passat is 40,000 yuan, and the purchase of the Tiguan L starts from 169,900 yuan for a limited time.

FAW-Volkswagen officially announced on December 1 a limited-time car purchase discount in December, and the participating models include Bora, Suteng, Magotan , Tanying, Tange and Tanyue.

Image credit: Chevrolet

On December 6, Chevrolet also officially announced the price reduction information: from December 1 to December 31, 2023, the purchase of Chevrolet SUV family will be discounted by up to 60,000 yuan for a limited time. At present, the price range of the Pioneer is 194,900-266,900 yuan, and the price of the Explorer is 184,900-239,900 yuan. According to the calculation of the maximum discount of 60,000 yuan for a limited time, it means that the price of the Pioneer starts at 134,900 yuan after the discount, and the price of the Explorer starts at 124,900 yuan after the discount.

Some luxury brand models have given greater price reductions, FAW Audi A4L is currently close to 100,000 yuan, and the price of low-profile models has reached about 230,000 yuan.

Volvo XC90 even has dealers who give a discount of nearly 200,000 yuan, but the premise is that you need to buy the car in installments. In addition, Volvo S90, XC60 and S60 also have discounts ranging from 94,000 to 132,700 yuan.

Among Chinese brands, BYD has also sounded the clarion call for exchanging price for volume. According to the information on the fuel transfer fund launched by BYD's Dynasty Network, the discount involves some models of Qin, Han, Tang, Song and Yuan, among which the Han EV Champion Edition can enjoy a maximum of 20,000 yuan of fuel transfer fund, and the Tang DM-i Champion Edition can enjoy a 15,000 yuan transfer fund, and the price of the Qin DM-i Champion Edition is pressed to less than 90,000 yuan after the discount. According to the data, as of the end of November, BYD's cumulative sales in 2023 were 2.672 million units. In the last month of 2023, BYD made a final effort towards the goal of selling 3 million vehicles a year by exchanging price for volume.

Image source: Xpeng Motors

In addition to BYD, a number of Chinese automakers have started to reduce prices. On December 8th, Xpeng Motors announced that it would open the "XNGP Kaicheng limited-time benefits" from December 8th to December 17th: Xpeng P7i has a maximum discount of 26,000 yuan for all models, of which the Max version model starts at 224,900 yuan......

"We will be patient and not reduce gross margin in the long run, and it is not healthy to reduce sales in exchange for price reduction. Although NIO CEO Li Bin said in the third-quarter earnings conference that he would maintain NIO's price system, he is also trying to complete the main task of seizing market share by launching the low-priced brand Alps.

Sales have gone up, but profits have gone down?

This price war, which lasted throughout the year, did bring an increase in sales.

According to data from the China Association of Automobile Manufacturers, in the first 11 months of this year, automobile production and sales were 27.111 million and 26.938 million respectively, an increase of 10% and 10.8% year-on-year, respectively. The China Association of Automobile Manufacturers said that the performance of the automobile market in November continued to improve, exceeding expectations, and it is expected that the automobile market will continue to improve in December, reproducing the phenomenon of "tail lifting" at the end of the year, and the production and sales of automobiles are expected to create a record high throughout the year, exceeding the expected completion of the annual forecast target.

However, it should be noted that although China's auto market has delivered a beautiful sales report card, the new automakers have generally failed to achieve profitability, and some traditional car companies have also experienced a decline in profits. Many car companies said that it was "helpless" to participate in the price war, and some car companies said that after weighing the pros and cons, they gave up the final battle of exchanging price for volume at the end of this year.

"We have indeed repeatedly discussed internally whether to reduce the price at the end of the year to boost sales, but I am afraid that it will be difficult to achieve this year's sales target. The person in charge of a Japanese car company told China News Weekly, "There is a lot of competitive pressure, but I still hope to develop steadily." ”

Shao Mingfeng, assistant general manager of VOYAH Automotive Technology Co., Ltd. and head of VOYAH Automotive Sales & Service Co., Ltd., said, "There is never a winner in a price war, and no one in the entire market can survive for a long time with negative profits. ”

"There are some friends who have made a very big move. Lu Fang, CEO of VOYAH Automotive, said bluntly, "We should follow a little bit appropriately to maintain the overall marketing rhythm, and it is a better model for us to increase the volume without increasing the price, so as to create more value for users." ”

Although many car companies have expressed doubts about the price war, Wang Chuanfu, chairman and president of BYD, said that in the next 3~5 years, the auto market as a whole or different market segments will continue to fight a price war.

"Now is the era of fast fish eating slow fish, not the era of big fish eating small fish, if car companies do not rush up in the next 3-5 years, there will be no chance. And in the next 3-5 years, the auto market as a whole or different subdivisions will continue to fight a price war. Wang Chuanfu said at BYD's 2023 semi-annual results meeting.

It is worth noting that Tesla, which was the first to set off a price war at the beginning of 2023, has recently raised prices against the market for four consecutive rounds. Will this be a signal that the price war is coming to an end?

Author: Liu Shanshan