In 2023, the price war in the auto market will be in full swing, and it will be more cost-effective to buy a car in 2024?
In the domestic auto market in 2023, the wave of price cuts and price wars have almost become the annual label, which started with the price war of joint venture brand fuel vehicles and eventually swept the entire auto market, involving almost all domestic car companies, and the prices of domestic auto products, especially the prices of new energy vehicles, ushered in an epic decline. Despite this, many domestic consumers who have always bought up and not down are still waiting for the right time to buy a car, because in their opinion, the price war in the domestic car market in 2023 will be so fierce, and this market inertia will most likely continue until 2024, so buying a car in 2024 may be cheaper than in 2023.
In fact, in our opinion, the price war in the domestic auto market is indeed likely to continue, but whether this continuation is the continuation of the price reduction method or the deepening of the price reduction range needs to be differentiated. Because in 2023, most car companies will not be able to achieve their annual sales targets despite continuous price reductions and promotions, which is a very demoralizing thing. Moreover, the industry-wide price reduction has become a general trend, so the possibility of automakers giving up price reductions and returning to the "guide price" in 2024 is not high, and it is a high probability event to continue to reduce prices.
But whether the price of a new car in 2024 will be cheaper than in 2024 may not be so uniform. 2023 is a special year, because of the end of the well-known three years, many manufacturers and dealers have relatively high expectations for 2023, believing that the automotive industry may usher in a small climax, but everyone has seen that the demand for the automobile market in 2023 has suffered a "cold spring", and the lack of sales caused by insufficient demand is achieved. However, these manufacturers are more optimistic when setting annual sales targets, after all, the market is more liquid.
Therefore, when a more optimistic sales expectation is formulated, it may bring about a rise in stock prices, and investors are more enthusiastic about investing. But in the first quarter, everyone found that there don't seem to be so many consumers buying cars, and everyone's enthusiasm for buying new cars is not so high. So in order to achieve the annual sales target as much as possible and explain to investors and shareholders, it is necessary to cut the price head-on, even if the price of some models after the price reduction is so low that it is jaw-dropping.
But such price reductions are clearly unsustainable, or rather just a remedy after blind optimism. After seeing the performance of the domestic market in 2023, automakers will most likely calm down, and when setting sales targets for 2024, they may not be so aggressive.
In short, the price of new cars may continue to be discounted, but it may be difficult to continue to reduce prices significantly, for the simple reason that car manufacturers produce and sell new cars, not to lose money. 2023 is a special situation, because we are confident that the market environment will improve, so the sales target is too high, and in the end, we can only reduce the price to make the actual sales as close to the sales target as possible. But in 2024, after everyone recognizes the reality, it may be necessary to ensure profits, that is, the sales volume may not be very high, but a certain profit must be guaranteed.
As we all know, the price war of new energy vehicles is essentially competing for seats, that is, competing for market share and brand status, so as to make their market position more solid. But for fuel vehicles, an obvious trend is the decline of the river, this year the penetration rate of new energy vehicles has exceeded 40%, with the advent of more low-cost new energy vehicles, the market size of fuel vehicles will only become less and less.
Therefore, fuel vehicles continue to reduce prices, grab market share, it is meaningless, even if a short period of time to obtain a certain market share, sales are good, but the general trend is that fuel vehicles will inevitably shrink as a whole, so it may be more meaningful to maintain profits than to increase sales, while maintaining profits, seeking a rapid transformation to new energy vehicles, which is mainly aimed at joint venture brands.
Therefore, we believe that the mainstream trend of the domestic auto market in 2024 may still be accompanied by a price war, but automakers and dealers may be more conservative in terms of price reductions, especially joint venture brand fuel vehicles, to ensure a certain profit, which is much more real than "loss" sales. Therefore, the price of new cars in 2024 can be greatly reduced, we do not agree very much, new energy vehicle manufacturers may continue to fight, but the price reduction of fuel vehicles has basically come to an end, except for luxury brand fuel vehicles.