The Beijing Auto Show has not yet begun, and a new round of price war has swept in.
On April 22, the ideal of being the first to achieve profitability in the new domestic forces, after its most important model, the ideal L6, was launched in obscurity, it rarely announced a price reduction for the whole system, of which the ideal MEGA dropped by 30,000 yuan, and the L series models decreased by 18,000-20,000 yuan according to different configurations.
On April 21, Tesla, which was still raising the price of the head iron, finally couldn't resist the pressure to reduce the price, and the price of all models was reduced by 14,000 yuan. In the context of global layoffs, Tesla does need more sales to support the development of the system and the stability of its stock price.
On April 17, Lynk & Co's main new energy model, the Lynk & Co 08 EM-P, also launched a new model, with a starting price of 175,800 yuan, 33,000 yuan lower than the original starting price of 208,800 yuan.
On April 15, Geely Galaxy E8 launched two Longteng version models, and the price was lowered to 165,800 yuan and 215,800 yuan, which was 10,000-13,000 yuan lower than the previous starting price.
On April 11, the new 580 Plus of Xpeng G6 was released, with a time limit of 179,900 yuan, which was 30,000 yuan lower than the starting price of 209,900 yuan in June last year. On the 20th, Xpeng once again launched a time-limited car purchase subsidy of 500 million yuan, of which Xpeng G9 and G6 were reduced by 20,000 yuan for a limited time, P7i was reduced by up to 50,000 yuan for a limited time, and P5 replacement subsidy was 15,000 yuan.
In just ten days, many popular or mainstream new energy products have been reduced in price, the reason is very simple, the core reason is that there is a large gap between sales and expectations.
This can be seen from the sales volume in March, or some recent corporate trends, such as ideal, Changzhou factory began to lay off employees, three days off and four days off, for example, Tesla, orders have been weak, for example, Lynk & Co 08 and Galaxy E8, that is, sales have rebounded, and the same is true for Xpeng G6.
If the data is put into the entire industry, perhaps from the report card of the first quarter and the industry expectations for the second quarter, every car company is relatively pessimistic.
Cui Dongshu, secretary general of the passenger association, revealed that in the first quarter of 2024, the domestic price reduction models have exceeded 60% of those in 2023, mainly new energy vehicles. In April, nearly 40 auto brands and a total of 128 car series announced discounts, subsidies or price reductions, which is the most direct feedback on market insight.
Entering 2024, the price war in the auto market has not stopped, and industry competition is continuing to intensify. So the question is, how long will the price war last in 2024? Will the price war still be an important force to support the auto market? Will the price war become a new disaster for new energy vehicles?
Price war, the inevitability of competition
Even after 16 car companies jointly signed a contract not to engage in vicious price competition, the price war has not stopped, but has intensified.
In fact, from the beginning of the new year this year, the whole industry is full of gunpowder, first BYD pulled down the price of Qin PLUS and destroyer 05 to the range of 70,000 yuan, so that the tram is cheaper than the oil car, and then Wuling, Nezha, Changan Qiyuan, Geely have followed up and announced price cuts, and the price of plug-in hybrid models that were originally more than 100,000 yuan have dived and entered the price range of 70,000-80,000 yuan, which will further push the fierce battle of the car market in 2024 to the abyss.
Share competition, price chaos, second-hand car crash, corporate profits plummeted, forced to follow...... On the one hand, the increasingly cruel market competition makes every practitioner in the industrial chain complain. On the other hand, there are constantly challengers, in order to seek their own interests and security, escalating the war again and again, pushing all participants to move forward passively.
With more car companies in sales and expectations deviations, more pessimistic sentiment and the evolution of public opinion, coupled with the Beijing Auto Show, more new products and new technologies will join this market battle, especially several head brands, such as BYD, Chery, Geely, Changan, etc., a variety of pure electric and plug-in hybrid products in the new energy market, constantly filling the consumer demand of the outside world, and car companies spend a lot of money to smash into the already unbearable segment, so that the price war in 2024 is bound to be more tragic than in 2023.
"The price war is the result of the relationship between supply and demand, when the supply can not be satisfied, the price will rise, and when the supply exceeds the demand, the price will be reduced. The person in charge of sales of a leading domestic independent brand said. At present, there are many new energy products and players, and the supply of products is obviously greater than the demand.
Once the demand is met, price reductions are inevitable, and now many car terminal prices have basically come to 20% off discounts and discounts, and many new energy products are listed on the market for annual models, compared with the previous year's product price reduction, and the phenomenon of 8-9% off is not uncommon.
In fact, the entire industry is fighting a price war, and no single car brand can be immune. The market cake is so big, and consumers are easy to choose more affordable products because of the difference of three to five thousand yuan. Cui Dongshu pointed out that in the face of hundreds of new models or facelifted models on the market, although price reduction is not the most appropriate method, it can indeed be effective in the short term to attract consumers.
The data can speak for itself, the most obvious is BYD Qin, when it lowered the price to 79,800 yuan, the family A-class car throne that was originally occupied by Sylphy Langyi naturally changed hands.
Zhu Huarong, chairman of Changan Automobile, said: "At present, everyone may be very worried about the fierce price war in the industry, but I think it is not so scary. With the fierce competition in this industry, it will accelerate the 'good money to drive out the bad money', and will return the industry to the benign state of the best value competition. ”
If the competition in the automobile industry is put into the long river of history to verify, it is enough to find that what Zhu Huarong said is not wrong. In fact, price wars in the automotive industry have become commonplace, and basically every few years, in the context of the industry cycle, there will be rounds of price wars.
The last brutal price war was after the SUV segment was hot in 2018, and the industry set off a large-scale price reduction wave. First of all, in order to expand the market segment, luxury cars continue to launch entry-level products with relatively low prices, and then ushered in the price sinking of joint venture brands, which also squeezes the market survival space of independent brands, and many independent car companies have to announce official reductions.
At that time, the switch from China V to China VI policy, the consideration of destocking also pushed the price war to become more brutal. It is precisely because of this that many brands can't withstand the pressure, do not have more funds and resources to invest in a new round of product development, and cannot form a positive cycle, which has led to many car companies and brands on the verge of bankruptcy.
The cruelest is yet to come
If the last round of price war brought about the reshuffle of the industry, it is indeed because of the times and the relationship between supply and demand, when the cycle of the automobile industry and consumption was in a downward period, laying a solid foundation for the knockout under the price war, that is, in the market environment at that time, the industry was sluggish, consumer confidence was insufficient, demand weakened, and then some objective factors were superimposed, and of course there were some new eliminations.
But the current Chinese auto market, at least not as bad as the negative market growth in 2018. On the one hand, the vitality of China's auto market is still the same, and the trend fed back from the data level shows that it has maintained a relatively stable growth every year in the past two years, and the total demand curve for automobiles is recovering.
On the other hand, the state supports the development of the automobile industry, and does not allow the automobile industry to fluctuate as in 2018. Recently, according to official data, China's total automobile output value has reached 11 trillion yuan in 2023, accounting for nearly 10% of the country's GDP, surpassing real estate for the first time and becoming China's first economic pillar.
Therefore, a series of policies will be carried out around the development of the automotive industry, whether it is the supply side or the consumer side. For example, new energy subsidies, purchase tax incentives and license plate policies are still continuing, and the state and the Ministry of Commerce are also vigorously promoting the policy of sending cars to the countryside and trading in the old for new, looking forward to releasing the demand and market of some users for additional replacement and purchase of automobile products in advance, and stabilizing the current relatively stable automobile consumption.
In terms of the current price war, there has not yet been the most direct collapse of car companies and brands, especially in the field of new energy, we are all in the rising and growth period, and it is difficult to appear the so-called rapid knockout, in addition to the original such as Weimar, Aiways, Gaohe and other enterprises themselves have many problems, as early as two years ago to lay the root of the new energy car companies, the vast majority of enterprises can also take advantage of the policy, with some support of the capital market can still be maintained.
This also means that the most cruel days of the price war have not yet come.
But even so, the cold air of the industry has been transmitted to every corner of the industrial chain. First of all, parts companies, last week, the world's No. 1 parts company Bosch, its senior management revealed in an interview with the media that some OEMs asked it to reduce the supply price by 30% this year. "Then we might as well go out of business," the senior executive said frankly.
Earlier, Chen Yudong, former president of Bosch China, revealed that it is also very common to be owed money by OEMs, and the ultimate means is to "stop supply". Bosch is still the same, not to mention the sub-suppliers that rank lower or further up the industrial chain, and the pressure to reduce prices will be passed on to these companies layer by layer.
Second, the price war will continue to weaken the brand power and competitiveness of each car company. For example, in terms of brand power, the prices of many new energy products continue to dive, constantly impacting the confidence and reputation of old car owners, coupled with the continuous decline in the price of new cars, the price of second-hand cars has dived, which is not beneficial to the building and establishment of the brand.
In terms of competitiveness, due to the price war, many enterprises have a great impact on profitability, and the long-term price war will also lead to cash flow problems of enterprises, thereby affecting the development and survival of enterprises. It is not difficult to find from the recent price cuts, whether it is Tesla, NIO or Ideal, the announcement of price cuts has not pushed the stock price up, but has hit the confidence of investors.
But for those new energy companies that are still on the verge of loss, the price reduction may have a long-term impact, but if the price is not reduced, it may not be able to pass this year. It is worth mentioning that the current new energy is still in the subsidy period, once the subsidy policy is withdrawn or cancelled, when the mainstream manufacturers begin to replace traditional fuel vehicle products with hybrids, and even to get more pure electric mileage, energy supplement anxiety users, those so-called intelligent driving and intelligent cabin as the core selling point of the products and brands, what kind of dilemmas and problems will they encounter?
After the Beijing Auto Show, more competing products appear and seize the market, the price war will continue, perhaps until the middle of this year or the end of the year, is the time when the price war is really clear.