Author: Li Suwan

　　The price war in the first quarter of 2023 in the auto market can be described as the strongest firepower in history.

Some people in the industry have recently used "Nine Palaces" in Moments to describe the price melee in the auto market, but it is still difficult to summarize the entire situation.

　　At the beginning of the new year, Tesla launched the first shot in this year's auto market price war with the lowest price since the Model 3 and other models entered China.

Subsequently, car companies such as Wenjie, Xiaopeng Motors, GAC Aion, GAC Toyota, and Dongfeng Nissan have joined the price war.

At present, the price war is constantly escalating.

Since March in Hubei Province, the strongest wave of car purchase discounts in history has further led the war from the field of electric vehicles to the field of fuel vehicles. The most concerned is the Dongfeng Citroen C6 with a guide price of 211,900 yuan. With a drop of 90,000 yuan, this B-class fuel car entered the price range of A-class cars at 121,900 yuan.

At the same time, other car companies and dealers have also joined in the price cuts.

In March, FAW Group launched a 150 million yuan time-limited car purchase subsidy campaign for Jilin Province, covering brands such as Hongqi, FAW-Volkswagen, FAW Audi, and FAW Toyota.

Chery and Chang'an have launched a tens of billions Huimin car purchase season.

　　The price war of electric vehicles also continues to spread. Ford Electric Motor announced on March 8 that from now until April 30, Ford Electric Motor will launch a limited-time special policy for stock clearance for all models on sale, and the price of related inventory vehicles will be reduced. 40,000 yuan, the lowest price since entering China.

Changan Deep Blue also launched a subsidy policy of up to 40,000 yuan for the Deep Blue SL03.

Even BYD, the national auto market leader with strong prices, finally couldn't bear it and joined the list of preferential promotions. Its two main models, Haiwang Song PLUS and Seal, launched special limited-time marketing activities from March 10 to March 31.

　　New energy vehicles are trying to grab the market share of fuel vehicles by reducing prices to achieve "the same price as gasoline and electricity", and fuel vehicles will further reduce prices to compete with electric vehicles.

As the price war in the auto market intensified, individual auto dealers even resorted to more ruthless moves.

On March 10, a promotional poster of a FAW Toyota dealer in Shenzhen showed that consumers who buy the electric car bZ4X will receive a compact car Vios as a gift.

The dealer used fancy marketing to attract price war hotspots. Although there were only two Vios cars as gifts, the gimmick of buying an electric car and giving a fuel car aggravated the disorderly "involution" of the price war in the auto market.

　　Behind this fierce price war, what happened to the auto industry?

The reasons for price cuts are complex, and the situations of different car companies are different, but the common situation is that the current demand in the auto market is weak.

　　In the past three years, under the impetus of a number of policies to promote automobile consumption, the domestic automobile industry has developed steadily on the whole.

According to data from the China Association of Automobile Manufacturers, in 2020, domestic car sales will be 25.311 million, a year-on-year decrease of 1.9%; In 2022, my country's auto sales will be 26.864 million, a year-on-year increase of 2.1%.

However, the growth trend failed to continue. This year's auto market got off to a bad start. In January, both year-on-year and month-on-month fell sharply. Even the previously high-speed growth of new energy vehicles came to an abrupt end, and they also fell into a negative growth situation.

The auto market in February has picked up from the data, but the situation is still not optimistic after excluding factors such as the Spring Festival holiday in January this year.

The latest "China Auto Dealer Inventory Early Warning Index Survey" released by the China Automobile Dealers Association shows that in February 2023, the Chinese auto dealer inventory early warning index was 58.1%, a year-on-year increase of 2.0 percentage points and a month-on-month decrease of 3.7 percentage points. The index is above the boom-bust line.

In this survey, 80.2% of dealers believed that sales in February fell short of expectations.

　　Recently, news spread on the Internet that the current national new car inventory is more than 6 million vehicles. Cui Dongshu, secretary-general of the Passenger Federation, responded that this was "false news."

Some auto dealers reported that although they did not know how much inventory the overall auto market had, they clearly felt the impact of the cold current in the auto market this year and were under certain inventory pressure.

　　Taking into account factors such as the withdrawal of policies such as new energy state subsidies and tax incentives for fuel vehicle purchases this year and the overdraft of some market shares in advance, auto companies generally expect that demand in the auto market will be relatively weak in the first quarter of this year.

Tesla made a big move when the state subsidy for new energy vehicles officially withdrew from the stage of history. It took the lead in setting off this wave of price cuts by controlling costs with integrated die-casting and other technologies, forcing many electric vehicle and fuel vehicle companies to cut prices to seize the market.

As the price war intensifies, consumers are more wait-and-see, and the pressure on car sales is increasing. Many car companies and dealers have further adopted various promotional measures in order to survive and develop.

　　In the past, when the market cycle entered a trough, car companies usually adopted the "price reduction for volume" model.

What is special about the domestic auto market this year is that electric vehicles, which are generally loss-making, are encircling fuel vehicles with even crazier price wars. They want to further expand to an annual sales volume of 9 million or even 10 million units this year on the basis of nearly 7 million units last year. The penetration rate increased from 25% to about 40%.

This has put traditional car companies, especially joint venture car companies that are a little slower in electrification, under unprecedented pressure, and at the critical moment of the confrontation between the two camps, they have stepped up price cuts to "tit for tat".

The more stringent National VI B standard will be fully implemented on July 1, 2023, and it is also forcing some fuel vehicle companies to cut prices and clear out inventory vehicles that do not meet the new standards.

Recently, on multiple social media, there have been rumors that major luxury car brands will cut prices significantly, and many luxury car companies such as Audi, BMW, and Mercedes-Benz have refuted the rumors that the prices have plummeted.

In addition, Guangzhou Automobile Group also denied the rumor that some models will be discounted by 50%.

　　"Price reduction" is only an expedient measure for the sales of many car companies, not the root cause. Moreover, price wars will affect the profits of car companies. The recent decline in stock prices of the auto sector is considered to be related to the fierce price war in the auto industry.

Although the prices of chips, batteries and other components have fallen recently, the fierce price war among car companies is still unsustainable.

With the inventory clearance coming to an end and the auto market expected to improve, the price of the auto market may gradually return to rationality in the second half of this year.