The price system of some joint venture brands collapsed, and a number of B-class cars were forced to below 15,<> yuan

Author: Wei Wen

"K5 can be discounted by 3,5 yuan ~ 4,4 yuan, and if Lion Platinum is listed in Shanghai, it can be discounted by 5,5 yuan." Recently, the sales manager of a Kia dealership told the first financial reporter that the K15 Kaiku, a large-size joint venture B-class sedan, has a starting price of less than <>,<> yuan after the discount.

For a long time in the past, in the domestic models of the joint venture brand, the B-class sedan is the first choice for flagship products, and it is also the carrier that reflects the brand value and technical strength of the corresponding car company, usually the mainstream joint venture product B-class car is priced between 17~20,<> yuan.

However, when visiting the car market recently, the reporter found that the B-class sedan products of many joint venture car companies have dropped the starting price to 15,13 yuan or even less than <>,<> yuan after the discount. The price loss of flagship cars is a microcosm of the collapse of the current price system of some joint venture brands.

In 2022, with the rise of new energy vehicle consumption, joint venture car companies with slow new energy transformation are under pressure, and large discounts have become the norm; In January 2023, Tesla set off a wave of price reductions for new energy vehicles, and car companies such as BYD and Leapmotor followed suit. In the face of the gradual formation of a new pattern of "oil and electricity at the same price", the joint venture brand has encountered greater downward pressure. In March, starting from Hubei, the domestic car market further set off a wave of price reductions.

However, a number of joint venture automakers failed to "exchange price for volume" in the tide of price reduction, and sales in the first quarter fell by more than 20% year-on-year. West China Securities Research Report believes that the price reduction of fuel vehicles was started by Dongfeng Citroen, and further led and promoted by other joint venture fuel vehicles, mainly due to high inventory and sluggish demand.

Sales of some leading joint ventures fell by more than 30%

"There will be more people coming to see the car on weekends, but they will repeatedly compare the prices, and they will always ask if the price will be reduced after that." A joint venture brand sales told reporters that among the competing products compared by users, new energy products of Chinese brands such as BYD and Geely appear more and more frequently.

In the process of visiting the car market, the reporter found that the terminal discount of the A-class best-selling sedan products such as Bora and Corolla has exceeded 2,5 yuan, and the starting price of some products has fallen below 10,3 yuan; the best-selling B-class sedans such as Accord and Magotan have also reached 3,5 yuan; The discount range of mid-size SUV products such as Tanyue and Envision exceeded <>,<> yuan. Compared with the above-mentioned head brands, some second-tier joint venture brands have a greater preferential margin, and the terminal price of some products is lower than that of self-owned brand products of the same level.

Since April, some car companies have continued the preferential price policy in March. SAIC Volkswagen's previous limited-time cash discount of 4.3 billion yuan, which ended on April 37; Ford's limited-time discount of $4,30 also lasts until April 4.

"As manufacturers began to press the warehouse, inventory increased, many 4S stores can only reduce prices, and some 4S stores have begun to reduce prices without a bottom line." Not long after many cars went on the market, there were some discounts at the terminal. A 4S point sales director said to the first financial reporter.

However, the larger discount did not significantly "heat" the joint venture brand car market. The above-mentioned joint venture brand sales told reporters that compared with the same period, the preferential range of products has been amplified, but the recent price war has spread widely, and users' expectations for preferential margins are often higher than the actual preferential range. The wait-and-see sentiment of users and the onslaught of new energy vehicles have become important reasons why the sales of joint venture brands are less than expected.

According to the Passenger Car Association, retail sales of passenger cars reached 2023.3 million units in March 158, up 7.0% year-on-year and 3.14% month-on-month, the weakest month-on-month growth rate in March 3. The association believes that the weak retail sales in March are the result of a combination of factors such as sluggish consumption and the aggravation of the wait-and-see atmosphere brought about by market price chaos.

From the perspective of national brands, the retail sales of own-brand vehicles in March were 3,77 units, a year-on-year increase of 2%. In March 2023, the share of domestic retail sales of self-owned brands was 3.48%, an increase of 8.0 percentage points year-on-year, and in the first quarter of 7, the share of self-owned brands reached 2023%, an increase of 50.2022 percentage points over the same period in 3.

Retail sales of mainstream joint venture brands in March were 3,54 units, down 9% y/y. Judging from the top 10 sales list of car companies, the number of independent car companies has also fully led foreign brands, and among the 10 seats, independent car companies account for 6 seats.

From the perspective of subdivided car companies, in January ~ March this year, the retail sales of joint venture car companies including FAW-Volkswagen, GAC Toyota and other joint venture car companies fell by more than 1% year-on-year, and the sales of leading joint venture car companies such as SAIC-GM and Dongfeng Nissan fell by more than 3% year-on-year. It is worth noting that in March last year, due to external environmental factors such as the epidemic and chip shortages, dealers entered stores and transactions were affected, and the passenger association said that the retail loss in March last year was large.

Since the beginning of this year, although the chip shortage has been alleviated compared with the same period last year, the sales of joint venture brands are still not satisfactory. Wei Wei, president of Visteon China, said in an interview with reporters that the chip shortage has eased since this year, and the impact is expected to be further reduced in the second half of the year. According to data from the China Automobile Dealers Association, the inventory coefficient of joint venture brands was 3.2 in March this year, compared with 06.1 in the same period last year.

West China Securities Research Report believes that since 2020, the discount rate of mainstream joint venture car companies has remained above 10%, and since August last year, due to the decline in terminal demand, the discount has been further liberalized, and the price reduction is a long-term volume price transmission brought about by the decline in share.

According to data from West China Securities, in the fourth quarter of last year, the average discount rate of the joint venture passenger car industry basically hovered below 12%, and the average discount rate in the first half of January this year once recovered to about 1%, but since the second half of February, the average discount rate has risen sharply, exceeding 10%; Among them, the average discount rate of some American brands and Japanese brands reached 2%. During the same period, the average discount rate of the self-owned brand industry was lower than that of the joint venture brand, and the overall trend was in a continuous downward trend, and the average discount rate was less than 12% in the context of the recent comprehensive price war in the auto market.

Zhang Yi (pseudonym), a management person of the planning department of a joint venture car company, believes that there will be several obvious trends in China's auto market this year, one is the price war between new energy vehicles and oil vehicles, and the price reduction of Tesla and BYD has made the purchase cost of end customers the same price as oil and electricity, greatly seizing the share of joint venture fuel vehicles. Second, in order to survive, the joint venture fuel vehicles launched a price war against their own brand fuel vehicles, and the 15,<> yuan level will be the most competitive battlefield.

Fuel vehicles are under pressure

In the past 5 or 6 years, there have been many price wars in China's auto market, each of which has led to dramatic changes in the pattern of the car market.

After 2017, second-tier joint venture brands began to gradually decline, and GFC, Changan Suzuki, Dongfeng Renault and others have withdrawn or collapsed. In addition, Ford has not launched new products for three years since 2016, and sales have continued to decline for many years; Hyundai's competitiveness has weakened due to multiple reasons such as multi-generational householding, cost performance being surpassed by independent brands, etc.; Peugeot-Citroen has problems such as confusing product definitions and difficulty in meeting the needs of Chinese users. All three companies once had annual sales of more than 3,50 vehicles, and the weakening of sales had a negative impact on the share of automakers in their countries.

In 2019, the China V emission standard was switched to China VI, and the pressure of destocking led to significant price fluctuations in the car market, and the pattern of the car market changed again. By the end of 2019, the share of German and Japanese companies increased by 10%, the share of Korean and French decreased by 4%, the share of the United States decreased by 1%, and the share of independent joint ventures was 5%.

The price war that began in 2022 has further transformed the pattern of the car market. For joint venture automakers with a penetration rate of only 5.8% of new energy vehicle products, the continuous shrinkage of the fuel vehicle market has brought greater growth pressure. The market share of self-owned brand car companies that have received new energy vehicle dividends is showing an upward trend year by year.

The research report of East Asia Qianhai Securities believes that the pace of joint venture car companies to enter the field of new energy is slow, the number of new high-quality car products is small, although the recent Shanghai Auto Show, joint venture car companies will release a variety of new energy products, but overall in the high-quality track of models are still few, the pace of layout is slow.

In the face of China's new energy vehicle market demand, joint venture car companies are generally slow to respond. Hyundai-Kia, whose new energy products have received a good response in Europe and the United States, has not introduced its products into China; Joint venture brands such as Honda and Toyota, as well as luxury brands such as BMW and Mercedes-Benz, still enter the market with a large number of "oil-to-electricity" products, and the competitiveness of products is difficult to match with products based on pure electric platforms; Although Volkswagen, Nissan, GM, etc. have introduced pure electric platform products, their intelligence and product configuration definition have not been widely recognized by Chinese users.

"For example, the ID series products launched by Volkswagen sell very well in Europe, but they are much worse in China; The ID series adopts MEB pure electric platform, which is no longer the kind of 'oil to electricity', and the driving texture and cruising range are still first-class, but the problems such as black screen and inability to OTA have become shortcomings complained and complained by users. Zhang Yi told reporters that in the era of smart electric vehicles, the product definition of overseas car companies has been unable to keep up with the needs of Chinese users, which has led to the difficulty of joint venture brand new energy vehicle products to replicate overseas success in China.

Zhang Yi also said: "For the information acquisition methods required by users, most of the reports we get are obtained from various research companies, and there are relatively few opportunities for direct contact with users; Second, we also need to use the report data to persuade foreign parties to define products for the Chinese market. However, as a global car company, product definition needs to take into account the global market, and not all the special needs of Chinese users can be implemented. He said that in 2017, the car company has realized the potential of China's new energy vehicle development and prepared to introduce new pure electric products that are still being developed overseas into China, and the work requirement at that time was to achieve mass production of products as soon as possible. However, to date, this series of products has not reproduced the sales scale and brilliance of its fuel vehicles of the same brand.

Zhang Yi analyzed that most of the "Chinese special products" in the era of fuel vehicles are based on overseas products, with modifications in appearance, ergonomics and configuration. But on the same technology platform, the core technology of domestic and overseas products is not fundamentally different; In the era of new energy vehicles, the binding of intelligence and cars has largely changed users' expectations of products and experience, and the weight of electrical architecture and software has increased, and it is no longer the previous to change the appearance, add or remove some configurations, and realize the localization of products. Even if the needs of Chinese users are recognized, the technology will not be able to adjust in a moment.

Wei Wei believes that the current automobile and intelligence have a strong binding, and Chinese users' demands for intelligent cockpit, intelligent driving and other fields are in a leading position in the world.

In the past two years, overseas car companies have begun to greatly strengthen their research and development capabilities in China, opening up relatively more permissions in an attempt to change the backward situation. Volkswagen Group Management Chairman Oberme recently said in an interview with the media that after announcing its cooperation with Horizon last year, Volkswagen will establish a new technology partnership in China, and the establishment of such a partnership will become more and more important in the future.

Toyota Motor also said at the "New System Policy" briefing held recently: "Toyota will start to establish a self-recycling R&D system in China this year. In the future, more vehicle products and technologies that users will be exposed to will be jointly developed and produced by Chinese engineers, FAW Toyota and GAC Toyota, which are more in line with Chinese consumers. ”