In one day, 9 car companies announced price cuts one after another, with a maximum discount of 47,000 yuan! Car companies say this year will be the most ＂rolling＂ year.
Since the beginning of the year, the price war between car companies has shown no signs of weakening.
Not long after the Spring Festival holiday, BYD took the lead in announcing the price reduction. The lowest price of its two models was 79,800 yuan, and the prices both dropped by 20,000 yuan. As of March 1st, eight models of BYD Glory Edition have been listed, covering A0-class cars to C-class cars, compact SUVs and medium and large SUVs, pure electric vehicles and hybrids. These models all adopt the strategy of reducing prices and increasing distribution, and the starting price drops by an average of 20,000 yuan to lower the threshold for car purchase.
The relevant person in charge of BYD said that BYD launched low-priced new cars. On the one hand, it benefited from the scale effect. In 2023, BYD became the China market sales champion and the global new energy vehicle sales champion with more than 3 million vehicles. Only this time, the Qin series sold more than 480,000 vehicles; On the other hand, due to the mastery of core technology, long-term accumulated vertical integration ability and perfect supply chain, the cost of making cars can be further reduced.
Other brands that followed BYD’s price reduction were Changan Qiyuan, Nezha Automobile, SAIC Volkswagen, Geely and so on. In one day, nine car companies announced price reductions one after another. The wave of price reduction in the automobile market is mainly concentrated in new energy vehicles, ranging from 5% to 15%, and the price drop ranges from several thousand yuan to ten thousand yuan.
For example, Geely launched the Spring Car Festival in 2024, with a limited-time discount of 2 billion yuan in March, a cash discount of up to 47,000 yuan, an interest-free loan of up to 100,000 yuan and a replacement subsidy of up to 10,000 yuan. The activities covered Xingyue L, Xingrui, Bo Yue, Emgrand, Binyue, Binrui, Haoyue, ICON and Panda cars, with a decrease of 3,000 yuan to 14,000 yuan.
Saic Volkswagen Touran family started the limited-time discount. The 2024 Touran 380TSI four-wheel drive respected the luxury version with a limited-time discount price of 279,900 yuan, and the 2024 Touran X 380TSI four-wheel drive respected the luxury version with a limited-time discount price of 265,000 yuan. At the same time, the 2.0T model of Touran family can enjoy a cash voucher of 2,000 yuan or a three-year worry-free maintenance package.
In addition, Tesla can’t sit still. On March 1, it launched a limited-time car purchase policy, which can enjoy a maximum discount of 34,600 yuan: the Model3/Y rear-drive version has a limited-time insurance subsidy of 8,000 yuan; Model3/Y specifies the paint benefits for all cars in limited time, with a maximum saving of 10,000 yuan; Model3/Y rear-drive version has a limited time and low interest financial policy, and the annual rate is as low as 1.99%.
The price reduction of car companies is undoubtedly a good thing for consumers. However, the concentrated launch of low-priced new cars has also caused the industry to worry about the "involution" of car companies and the start of a new round of "price war". According to the data from the National Passenger Car Market Information Association, at the beginning of January 2024, the discount rate of the domestic passenger car market was about 20.4%. Experts believe that the "price war" is largely related to the contradiction between oversupply and insufficient demand in the domestic automobile market. With a large number of new cars listed in 2024, the trend of market supply exceeding demand is difficult to change in the short term.
"At present, the electrification transformation continues to drive on the fast lane, and the intelligent transformation begins to shift gears. The development of new energy vehicles will only run faster and faster, and will not give us the opportunity to stop, slow down and catch our breath. " Wang Chuanfu, chairman of BYD, said that the essence of "price war" is the contradiction between supply and demand, and supply exceeds demand.
According to the data from china automobile dealers association, in January 2024, the inventory early warning index of automobile dealers in China was 59.9%, down by 1.9 percentage points year-on-year and up by 6.8 percentage points quarter-on-quarter. The inventory early warning index was above 50% of threshold, which means that the automobile circulation industry is in a recession zone, and the prosperity has dropped from last month.
He Xiaopeng, CEO of Xpeng Motors, said that 2024 is the first year for China automobile brands to enter the "blood sea" competition, and a fierce competition is inevitable. Gan Jiayue, CEO of Geely Automobile Group, said that 2024 will be the most "volume" year, and the volume price, volume products, volume services, volume flow … everything will come to the "real chapter".
△ Customers buy cars at Shenyang Auto Expo in Liaoning. (Image courtesy of CNSPHOTO)
Next, the price war led by new energy car companies in the head will continue. According to the research report released by Ping An Securities, the growth rate of new energy car companies in the head will be under pressure in 2024, especially in the mainstream price band of 100,000-200,000 yuan, and the battery cost will provide space for car companies to further reduce prices. According to Wind data, as of February 29th, the average price of domestic battery-grade lithium carbonate was 99,500 yuan/ton, a sharp drop of over 70% compared with the same period last year. Guolian Securities Research Report said that the price of lithium carbonate, the core raw material of the lithium battery industry, is close to the bottom. In 2023, the price of lithium carbonate fell by 82%. At present, the price of lithium carbonate has fallen back to the level at the beginning of 2021, and it is expected that it will stabilize and rebound with the growth of demand in 2024.
According to the research report of china galaxy Securities Research Institute, although the price war is unfavorable to the profitability of car companies, from the cost side, the reduction of lithium carbonate price and the continued play of scale effect are expected to hedge some price reduction losses and enhance the operational resilience of the industrial chain.
Experts suggest that on the one hand, car companies should continue to strengthen research and development, and constantly explore new materials, new technologies and new processes to reduce the cost of building cars; On the other hand, efforts should be made to explore the market and deepen the market to help dealers become bigger and stronger and effectively reduce inventory.
China Business Daily is integrated from CCTV Finance, Red Star News and Tide News.
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