At the beginning of the year, Tesla's price cut involved a number of new forces in car manufacturing into the price war, and in March, Dongfeng's price reduction subsidies swept the automotive industry again, fuel vehicle companies have entered the game, and new energy vehicle brands cannot stay out of the matter. Choose to follow the price reduction, or introduce a price insurance policy, firmly do not reduce the price, car companies continue to make moves, the war continues to burn.

It seems that the fierce battle is in full swing, and some manufacturers have shown fatigue. "Now many consumers do not buy the discount of one or two thousand yuan, thinking that we can reduce it by tens of thousands of yuan." A dealer in East China of a self-owned brand car company told reporters that the premium space of manufacturers is not as large as imagined, and there is no way to follow the price reduction strategy of tens of thousands of yuan in the market.

In terms of terminal sales, a number of automobile brands offline store sales revealed to reporters that the recent increase in the flow of customers to stores, but the transaction volume has declined significantly month-on-month, consumers mostly "see more, buy less", and the cycle of obtaining orders is also lengthening.

At the same time, whether the impact of the auto price war has been transmitted to the industrial chain has attracted much attention. "Agreements with customers are signed once a year, and we have not been affected much at the moment." A person from an A-share auto parts company told reporters that although it will not be affected in the short term, once the price war is prolonged, there will be other major changes in the future, which will inevitably affect supply chain enterprises.

Consumer "appetites" are changing

"In the past, we used to wait for the delivery of the order, but now it is more difficult to get the order." Speaking of recent sales, a new energy vehicle brand sales consultant told reporters that the transaction volume of his store in March fell by nearly 3% month-on-month, but the number of stores entered increased month-on-month. "Many customers come for the discount, and when they see that the discount situation is not the same as they imagined, they turn around and leave." The sales consultant believes that the large subsidy price reduction behavior of the Dongfeng series has indirectly caused some consumers to "increase their appetite", and even only look at who reduces the price when buying a car.

A wait-and-see mood spreads in the car market. In the new energy vehicle exhibition area of a shopping mall in Shanghai's Pudong New Area, the reporter noticed that most stores had printed promotional posters with the words "discount" and "price reduction", and most of the issues consumers cared about revolved around price. "With so many activities now, we don't mind comparing a few." Mr. Zhang, a citizen who came to see the car, told reporters.

Most of the interviewed auto brand dealers or sales personnel believe that the price reduction tide in the industry has an impact on sales in the short term, and some dealers received "guidance words" from manufacturers at the beginning of the Dongfeng price reduction. "The manufacturer sent us a PPT, including how to explain to the customer the reason for Dongfeng's price reduction, such as the price reduction is for stock cars, the discount is limited to Hubei, etc." Some dealers told reporters that after calling for a return visit, customers who entered the store did not have as many intended customers as before, and customers did not seem to be in a hurry to buy a car.

"Judging from the situation in the first three weeks of March, the conversion rate of terminal passenger flow is not high, consumers are in a wait-and-see mood, and the overall demand is weak." According to data disclosed by the Passenger Association on March 3, the passenger car market retailed 3,22 units on March 3~1, down 19% year-on-year and 70% from the same period last month. Since the beginning of this year, the cumulative retail sales have reached 8.4 million units, down 337% y/y.

The passenger car market retail sales in March were good, but the marketing strategy of Hubei's price reduction promotion was relatively out of the circle, which triggered a wide range of discussions inside and outside the industry, causing a certain degree of panic at the level of OEMs and dealers, and the promotion war in various places brought chaos to the car market.

As for whether the price reduction tide in the field of fuel vehicles will fully affect the new energy vehicle market, the industry's views are not exactly the same. "The overall purchasing power of the automobile market is certain, and for some consumers, if they buy fuel vehicles due to large price reductions, they will not buy additional new energy vehicles." Zhang Xiang, director of the New Energy Vehicle Technology Research Institute of Jiangxi New Energy Science and Technology Vocational College, believes that the challenge of this round of price cuts to new energy vehicles still exists.

He Songsong, partner of Rees Strategic Positioning Consulting China, said in an interview with reporters that the perception of fuel vehicle price reduction to consumers is a price war, clearing inventory, smoothing out the past brand premium, and causing great damage to the brand in the long term. However, the price reduction of new energy vehicles has market reasons on the one hand, but it is more caused by the decline in the cost of battery raw materials. In a period of rapid growth in an emerging category, low prices will further reduce the threshold for early adopters of the category, so this round of price reductions will do more harm to traditional fuel brands.

Price reduction and price insurance Car companies have their own plans

In the wave of price reductions, consumers can choose to watch, but it is difficult for car companies as authorities to watch from afar. It is more common to follow the trend and reduce prices, and launch preferential combination punches such as rights gifts. According to incomplete statistics, more than 40 automobile brands have joined the price war through various forms such as official cuts and subsidies.

Some brands have played the "price insurance card", such as Ideal, Zerorunning, Nezha, Denza and other brands have launched a "90-day price insurance" policy. Taking Li Auto as an example, if the official price of the purchased model is reduced within 90 days from the order date (inclusive), Li Auto promises to actively return the price difference if the official price of the purchased model is reduced.

The reporter learned that the priority of some brands that announced price insurance is to speed up delivery, which is intended to stock orders. "As far as the situation of our store is concerned, there is a backlog of orders in March, and this price insurance policy will better promote customer delivery." Some ideal car related people told reporters that the price insurance policy locks in the customer's delivery speed, and tries not to give the customer who has already made up too long to hesitate.

In addition, there are many "anti-involution" car companies. "We do not fight price wars, but mainly value wars, after-sales service wars, quality wars, technology wars, and corporate moral wars." Gan Jiayue, CEO of Geely Automobile Group, said at the results meeting recently.

"The three different choices are based on the competitive situation and situation faced by different types of car companies." He Songsong analyzed to reporters that most of the enterprises that follow the price reduction, including some large-scale automobile groups, the terminal inventory must have a reasonable warning line, in fact, price control has long been a customary means, this time there is no essential difference. However, for some new forces, it is still in the cycle of new product launches, sales and production capacity are climbing, and new products also have a certain degree of freshness and premium, so they will not cut prices decisively. The launch of the price insurance strategy, under this round of price reduction tide, will also have a certain degree of marketing effect.

Not all car brands have the confidence and space to significantly reduce prices. Some self-owned brand dealers told reporters that the policies given by manufacturers are "squeezed toothpaste", and whenever they see a decline in sales in the market, they will release some policies. "Originally, we only had a few thousand yuan of preferential range, with the change of market conditions, it has been put into a discount of about 1,<> yuan, and now customers want us to increase the discount again, we also want to make a profit, and there is not much room for price reduction." The above-mentioned dealers believe that the joint venture brand is in a sense to eat the brand premium, and the price reduction space of the independent brand is not as large as the joint venture brand.

The impact may be transmitted from the bottom up

It is worth noting that the impact of price cuts in the end market is likely to continue to spread. Will the price reductions of automakers be transmitted to the upstream of the industry chain? Recently, a number of listed companies have responded to this.

Zhengqiang said on the interactive platform on March 3 that the company's products are mainly sold to the aftermarket and the host supporting market, and at present, the large price reduction of automobiles is mostly slow-selling inventory products. This price reduction has no impact on the company's aftermarket. "For the host supporting market, the domestic generally implement the annual price adjustment convention, the end of last year or the beginning of the price adjustment agreement signed, the company's customers are mostly foreign companies, the degree of credibility is high, the price reduction tide on the company's host supporting market currently has no impact, if the price reduction tide continues or there are other emergencies, it is not ruled out that it will have an impact on the company's host supporting market business." Zhengqiang shares said.

There are also companies that say the cruel side of market changes in their replies. "Recently, affected by the sharp price reduction of fuel vehicles on the sales of new energy vehicles, the continuous decline in the price of lithium carbonate has led to an increase in the pressure of destocking in the industry, etc., the development speed of the new energy industry has slowed down, and the company's production and operation are proceeding normally, but the business performance will be affected to a certain extent." Hunan Yuneng recently said on the investor interactive platform.

Although the impact has not been affected in the short term, there are companies planning long-term development and adjusting the product structure for downstream customers. "We are already developing lightweight products to meet the needs of customers to reduce costs, and for OEMs, cost reduction is an inevitable trend in the long run." A person from an A-share auto parts enterprise told reporters.

Huatai Securities Research Report pointed out that the impact of the price reduction tide on industrial chain materials is multifaceted, on the one hand, it may squeeze the once high-profit links of industrial chain materials, "We believe that lithium battery copper foil and aluminum foil processing fees, lithium salt prices will continue to be under pressure in a short period of time"; On the other hand, automotive overselling drives the demand for upstream materials. In addition, under the idea of cost reduction, the demand of car companies to reduce material consumption may become more urgent, which is conducive to the application or further penetration of new technologies such as integrated die casting, magnesium alloy, and composite materials.

The industry hopes that the price reduction sentiment will dissipate as soon as possible

As the tide of price cuts continues to ferment, the industry can't help but speculate where the end of this battle is. An observable entry point is that most brands mostly choose the end of March or the end of April for the cut-off time for giving discounts, and the duration of the insurance policy is mostly 3 days or 4 days.

Does this mean that price wars are only short-term actions? Zhang Xiang believes that price reduction is a response for some car companies to clear inventory, and the price war is worse for smaller car companies, and will also aggravate the survival of the fittest in the entire industry. "As a company, after all, we must consider long-term development and profitability, and the price war cannot be long-term, and it is expected to stop in the second half of the year." Zhang Xiang said.

Recently, the volume calling for a rational view of price wars has also intensified. On March 3, the China Association of Automobile Manufacturers issued a document saying that combined with the recent situation reflected by all parties, the hype of this round of price cuts should be cooled down as soon as possible, so that the industry can return to normal operation and ensure the healthy and stable development of the industry throughout the year.

"Price wars don't last long, value for money is an eternal business rule." The China Association of Automobile Manufacturers pointed out that in the new journey of China's modernization, the automobile industry undertakes the important task of building an automobile power. Automobile companies should focus on the long term, make more efforts in product technology, quality, service, brand power, etc., and strive for high-quality development.

In fact, the current fierce price competition has made some car companies unable to help, "Generally speaking, the May Day holiday in the first half of the year will be a peak period for car purchases, and March and April are relatively low seasons." Before the peak period of car purchase, there will continue to be manufacturers to push the so-called comprehensive discounts, but in the peak season, if we continue to fight a price war, the profit is too thin, we can't afford it. Some car companies told reporters that it is expected that the price war will end in May, and the battle line is too long for enterprises to gain more than they lose.

"The price reduction of automobiles is a trigger for the whole body, the price war has evolved into an industry event, in this key node of accelerating the popularization of alternative fuel vehicles by new energy, many manufacturers are sacrificing profits for share, and no one wants to lose an inch of territory." He Songsong told reporters that the impact of the price war on the industry will continue in the short term, and when the new peak season comes, with the release of new products, car companies also have a better time to collect price behavior. (Reporter Mei Shuang)