Recently, the intrusion of Xiaomi, a catfish, has strongly stirred the troubled waters of the domestic new energy vehicle market, and a new round of price war has become more and more intense. At the same time, the overseas new energy vehicle market has to face price competition due to the entry of Chinese catfish, and domestic and foreign car companies have reached a new height for a while.
The data shows that the logic of exchanging price for volume still works in the export market. China's automobile exports in the first quarter were 1.324 million units, up 33.2% y/y, including 1.11 million passenger car exports, up 34.3% y/y. However, the market is green, but the word-of-mouth is a little red. The new round of price cuts not only stabbed consumers in the back, but also made Chinese cars begin to encounter bad voices in some overseas markets, and many industry insiders bluntly said that Chinese car companies must face up.
01
Chinese cars become overseas catfish
With the advantage of "good quality and low price", Chinese automobiles are becoming a "catfish" that stirs overseas markets.
In the past year, the best sales of new energy vehicles in China were mainly Europe and Southeast Asia. A few days ago, Bordin Boonvisut, president of metro group, a Thai car dealer, said in an interview with a reporter from China Automotive News that with the global surge of new energy, the Thai electric vehicle market is gradually emerging, especially after Chinese electric vehicles enter Thailand. Starting from 2022, the Chinese auto industry began to enter the Thai auto market after SAIC MG entered Thailand, and since then, BYD and Changan have also entered and launched many cooperation with local Thailand.
Li Feng, deputy secretary-general of the China Chamber of Commerce in Russia, who has been overseas all the year round, told reporters that due to the conflict between Russia and Ukraine, since the beginning of 2022, many Japanese and German car companies such as Volkswagen, Mercedes-Benz, BMW, Toyota, and Nissan have successively stopped production in Russia and stopped exporting cars to Russia, and the import channels of auto parts have also been restricted. So in the past two years, Russia can only choose Chinese cars, which undoubtedly gives Chinese car companies a great opportunity, Chery, Great Wall, Changan, Geely and other car companies in Russia have good sales results, Russia has become a gold market for Chinese car companies to export.
"In fact, in the past, the Russian market did not trust Chinese products, but in recent years, with the gradual improvement of the product power of Chinese brands, Russians have found that Chinese products have low prices and good performance, and have gradually improved, so Chinese car companies have gained considerable market share in Russia. Li Feng said.
In the European market, Zhao Aimin, Secretary of the Party Committee and Deputy General Manager of SAIC International, introduced at this year's Geneva Motor Show that the price of the MG4 starts at 30,000 euros, and when the MG4 is first launched, the ID.3 is priced at about 45,000 euros, which is comparable to the Tesla Model 3. But today, the latter two have been reduced in price and are only 1000 euros more expensive than the MG4.
Earlier this year, in response to Germany's policy of eliminating subsidies for "environmental incentives" for electric vehicles, BYD cut prices in the home bases of Volkswagen, BMW and Porsche, according to the German automotive magazine Automobilwoche, involving models such as the Atto 3 (Yuan plus), Dolphin and Seal. It is reported that BYD has cut the price of electric vehicles by 15% in Germany, especially the Atto 3 model, after a price reduction of about 15%, the starting price is less than 40,000 euros, which is significantly lower than the Volkswagen ID.4 and Tesla Model Y, and also lower than the price of Volkswagen's entry-level electric car ID.3.
02
Consumers and dealers are complaining about price reductions
Although Chinese pangasius still maintains a lot of vitality overseas, the overseas market obviously does not enjoy this kind of intensity, and the muddy water is not all gold, but also a lot of sediment.
The purpose of price cuts for car companies is to maintain the attractiveness of their products in a highly competitive market. The great profit space has naturally attracted many consumers. However, there are also some overseas car owners who feel that they have been stabbed in the back, and some European consumers say that "it is really uncomfortable to be reduced in price just after buying a car".
In Southeast Asia, more Chinese car companies are "sharpening their knives to pigs and sheep", setting off multiple waves of price cuts. Industry insiders said that benign price reductions are conducive to the sustainable development of consumers, car companies, and the market, and in addition to the controllable price decline brought about by cost control, the cruel, blind, and irrational price reductions for the purpose of "killing" others are the main culprits causing market turmoil at home and abroad.
After many car companies go overseas, in order to quickly seize market share, they adopt more radical methods such as price reduction, although it is out of market behavior, but it has had a certain impact on the stability of the local market, causing dissatisfaction among many overseas dealers.
Bordin Boonvisut pointed out that Chinese EV brands are facing an important problem when operating overseas, and that is that "price cuts are too fast". In the past year, price wars between automakers have occurred one after another, and the impact has also spread to overseas markets. Frequent price cuts by Chinese automakers have had an impact on the local consumer market, which is not good for consumers who have already purchased vehicles, and on the other hand, it is not conducive to healthy competition in the local market.
The situation in the Russian market is even more severe. Li Feng introduced that with the increase in the market share of Chinese brand cars, more and more problems have been exposed. For example, Russia is a cold region, and a large amount of snow melting agent will be sprinkled on the ground every winter, and there are requirements for cold and corrosion resistance for auto parts, but many Chinese products are not considered in the research and development of these particularities, so the damage rate of parts is very high, and at the same time, after-sales service is difficult to keep up, and many Russian users complain.
For Russian consumers, "choosing Made in China is just a last resort, not the most satisfying choice." Li Feng said that once the Russian market eases, perhaps Chinese brands will become the first products to be abandoned.
The outbreak of the price war has exacerbated the dissatisfaction of Russian consumers and dealers.
"The price reduction is too fast!" Li Feng sighed helplessly, "The after-sales of Chinese brand cars in Russia is a big problem, and dealers originally wanted to improve the service, but the price reduction of car companies is too fast, dealers are under pressure, and profits are difficult, let alone good service." ”
"Some dealers originally planned to focus on after-sales this year, do a good job in parts supply, maintenance services, etc., but under the new round of price reductions, they all said that they would rethink whether they would continue to invest. Li Feng said that the whole body will be affected by the trigger, and the car companies will press the price again and again, and the final consequence will be passed on to the consumer.
03
Stand firm to go far
Bordin Boonvisut pointed out that many Chinese car companies have cut prices frantically in pursuit of sales, which not only destroys brand credibility, but also makes buyers suffer losses, which is unfair to consumers. In the long run, Thai financial institutions may join forces to resist providing financial support for Chinese electric vehicles, which will bring some warning to Chinese automakers.
The price strategy of Chinese automakers is affecting the reputation of Chinese brands in overseas markets. "Many dealers have begun to lose trust in Chinese brands. We can't play with such a stable and huge market, let alone a bigger market. Li Feng said bluntly.
There are also some car companies that have begun to be "counterattacked". According to an insider of an electric vehicle company, it has been restricted by local banks when entering the Thai market.
As for the "price war" game, Bordin Boonvisut does not understand why Chinese brands would set a high price and then lower it. In his opinion, this practice affects brand value, and he believes that the opposite should be done.
"I suggest that Chinese automakers should set a relatively low price at the beginning, and then increase the price back little by little as the market gradually stabilizes, which is the right way. In this way, customers who trust Chinese EV brands will be 'rewarded' because they are getting a cheaper price. Banks and other financial institutions will also recognize the value of the brand more and more. Therefore, starting with a low price and gradually increasing the price is a good strategy for EV brands to go long-term. Bordin Boonvisut believes.
For example, he said, Toyota has adopted this pricing method, which slowly increases over time, so that people who buy the brand build trust. "Toyota has been very successful in Thailand since 1969, which is why Toyota has been number one. Bordin Boonvisut said.
In an interview with reporters, industry insider Chen Yong (pseudonym) believes that Chinese car companies generally have the problem of "short-sightedness". "What is the purpose of the price reduction? In order to quickly seize market share? But what about after that? Have the car companies considered it? Can the after-sales service keep up? The automobile is a long-term development industry, not a one-shot deal, and the car companies are not a one-shot change place. For enterprises, brand image is the cornerstone and foundation of long-term development, blind price reduction, irrational competition will affect the brand value, but also affect the impression in the minds of consumers, once the loss of consumer trust and confidence, car companies are really difficult. He admonished.
Entering the era of new energy vehicles, China's manufacturing is rapidly leading the world, but while running out of China's speed and breadth, car companies should not forget China's depth and China's thickness.
Text: Zhang Yahui Editor: Xue Yapei Layout: Wang Kun
Add a chicken leg to the editor!