BYD started a new round of price war, and experts interpreted: there are three considerations
Edited: Huang Sheng
BYD Auto's official Weibo announced on February 28 that it would launch the all-new Han and Tang models, with a starting price significantly lower than the models on sale.
Among them, the price of the BYD Han DM-i Glory Edition starts at 169,800 yuan, the Han EV Glory Edition starts at 179,800 yuan, the Tang DM-i Glory Edition starts at 179,800 yuan, and there is also the 2024 Han DM-p God of War Edition priced at 259,800 yuan. In addition, the top model of the Han EV Glory Edition will be the first model equipped with the "Eye of the Gods" intelligent driving system on Dynasty.com.
Image source: Screenshot of the live broadcast
At the beginning of the new year, the price war between car brands has started again. On February 19, BYD (002594. SZ, share price 188 yuan, market value 547.295 billion yuan) officially announced, the starting price of the two new models Qin PLUS Glory Edition and Destroyer 05 Glory Edition is 79,800 yuan. Among them, the Qin PLUS DM-i Glory Edition is 20,000 yuan cheaper than the previous Champion Edition.
On the same day, Wuling, Changan Automobile, Nezha Automobile, Beijing Hyundai, SAIC-GM Buick and many other car brands successively released price reductions for a number of models. In the following days, the "price reduction trend" continued to ferment. Changan Mazda, Cadillac, Zeekr and other brands have announced relevant car purchase discounts.
Why did BYD choose to reduce the starting price of the new brand "Qin" to the prefix "7"? How will this affect BYD's brand image? And why will it cause a series of chain reactions in the industry? In this regard, the Brand Value Research Institute interviewed Professor Chen Ming, director of the Marketing Department of the School of Business Administration of South China University of Technology, and Pang Rui, a well-known brand expert and founding partner of Zhansheng Communication.
Reason: BYD launched a "price war" at the beginning of the year with three considerations
According to the "Daily Economic News", after the launch of BYD's "Qin" new product, the biggest highlight is the price - BYD directly reduced the official starting price of the Qin PLUS Glory Edition and the Destroyer 05 Glory Edition to below 80,000 yuan.
In fact, the Qin series, which belongs to the new energy A-class entry sedan, is one of the pillars of BYD's sales. According to the data of the Passenger Association, in the 2023 sedan market sales ranking, the BYD Qin PLUS DM-i ranks third with an annual sales volume of 307,400 units. In 2023, BYD Qin will sell more than 480,000 units and win the annual family car championship for the first time.
In Pang Rui's view, the price of the mature product "Qin" is reduced, so that the starting price directly enters the price range of A0-level products in the traditional sense of less than 80,000 yuan, BYD obviously has the consideration of further increasing market share and increasing brand penetration. "This price reduction may also help BYD further test the market reaction and find out the hole cards of competitors. He said.
Chen Ming said that BYD, as a leading brand in the new energy vehicle industry, took the lead in launching a price war for three reasons: first, as product innovation enters a technical bottleneck period, it has become more and more difficult to maintain market premiums by relying solely on product advantages; second, with the increasing number of market participants, the industry needs to reshuffle to establish a new competitive pattern; and finally, as an emerging market with huge consumption potential gradually emerges, it has become the key to quickly seize the opportunity.
"This price war must be a protracted war, fighting for the company's product strength, production capacity and technical reserves, of course, more dependent on the company's ability to control the entire supply chain. Chen Ming believes that "this is a strategic action that requires a high degree of vigilance and response by the entire industry, and for other car companies, if they do not follow up in time, they may lose valuable strategic opportunities and even face the risk of going out." ”
Impact: BYD's price strategy is part of its brand strategy
In the short term, the price strategy can indeed greatly increase sales, but what impact will it have on BYD's brand image? Will consumers be more inclined to see BYD as a "cost-effective" brand?
According to the "Daily Economic News", Pang Rui is optimistic about this, he stressed that BYD has built a brand matrix that comprehensively covers the high, medium and low-end markets. "From Yangwang, whose product prices exceed one million, to Equation Leopard and Denza, which are about 300,000 yuan, and then to Qin PLUS, which has been reduced to 80,000 yuan (below) price range, BYD's brand matrix is relatively complete among new energy vehicle companies. Pang Rui explained.
In addition, from the perspective of historical development trajectory, BYD has gradually developed from the low-end product line of F0, F3 and other fuel vehicles, and its brand image is gradually moving towards the mid-to-high-end market in recent years. "BYD, which currently owns mid-to-high-end brands such as Yangwang and Formula Leopard, as well as mid-range models such as Tang/Han, has a sufficiently diverse user base, and the price reduction of a single model is unlikely to have a significant impact on its overall brand. Pang Rui thinks.
Chen Ming said that the impact of price on the brand largely depends on the existing image of the brand in the minds of consumers.
"If a brand has successfully created a high-end image, then launching a product with an affordable price but high-end configuration can enhance the brand's people-friendly image, and the impact on the overall brand is relatively limited. Chen Ming said, "But for those companies that lack a clear brand strategy, although the low-price and low-quality strategy may bring a certain amount of market heat in the short term, in the long run, it will often lose the market due to the loss of consumer trust." BYD's price strategy this time is actually part of its brand development strategy, aiming to stabilize the consumer base and lay a solid foundation for future market competition. ”
In fact, on February 25, the sixth day after the launch of the Qin PLUS Glory Edition, BYD's high-end brand Yangwang launched a new model, Yangwang U9, which attracted market attention. According to the data, the official price of Yangwang U9 is as high as 1.68 million yuan, exceeding the 1.098 million yuan of Yangwang U8.
Looking up at the U9, the price is 1.68 million yuan Image source: Screenshot of BYD Auto's official account
Daily Economic News Comprehensive BYD Auto Weibo, Daily Economic News (Reporter: Huang Bowen)