China News Service, March 15 (China News Finance reporter Ge Cheng) The "price war" in the auto market in 2024 is late but has arrived.
After BYD fired its "first shot" in mid-to-late February, independent companies, joint ventures and "new forces" entered the market one after another.
In March, the battle gradually intensified, and the covered models also spread from new energy vehicles to fuel vehicles. Some models even had a "one price per day" phenomenon.
Some people in the industry believe that, unlike last year, the knockout competition caused by the "price war" in the auto market this year will be further accelerated, which can be described as "a matter of life and death."
Predictions show that the top ten car companies in terms of sales this year will occupy close to 85% of the market share. In the next few years, 80% of the brands may shut down (shut down, suspend operations, merge, or change production).
Data map: Cars are shipped to various places.
Photographed by Wang Yizhao
The “price war” in the auto market may continue throughout the year
Sino-Singapore Finance has noticed that compared with last year, the "price war" in the auto market will start later in 2024, and the car companies that take the lead in cutting prices are also different.
In 2023, Tesla quickly launched the "historically lowest price" at the beginning of the year to ignite the market; in 2024, the "price war" started by BYD only "belatedly arrived" in mid-to-late February.
However, this year, the "price war" in the auto market has become more intense.
Some consumers said that they experienced the embarrassment of "paying money in the morning, picking up the car in the afternoon, and reducing the price in the evening."
Some dealers also said that unlike in the past, news of price cuts from car companies came too quickly, and stores often had no time to explain to consumers.
In addition to the change in time and the sudden news of price cuts, some experts said that the triggers of the "price war" in the auto market this year are also significantly different from last year.
Zhang Xiang, a researcher at the Automotive Industry Innovation Research Center of North China University of Technology and director of Vodafor Digital Automotive International Cooperation Research Center, told reporters that the "price war" started in the auto market last year was partly due to the fact that the "National VI A" emission standard models were facing replacement and they were eager to clean up. Inventory, there is no similar situation this year.
Therefore, he believes that this year's "price war" in the auto market is likely to not "die out" in the second half of the year, but will instead continue throughout the year.
Data map: 2023 Guangdong-Hong Kong-Macao Greater Bay Area Auto Show.
Photo by China News Service reporter Chen Wen
The purpose is to shuffle the cards for competition
In the past two years, why have leading car companies taken the lead in starting the “price war” in the auto market?
The reporter noticed that most of the price-reduced models currently on the market have similar competing models.
Take BYD Qin, which sells for less than 80,000 yuan, as an example. It is an A-class new energy sedan with many competing products in the market segment and strong homogeneity.
As for high-end products, such as the million-yuan model "Looking Up" also produced by BYD, there are no price cuts for the time being.
Although competition is fierce, car companies are rushing to rush into this track. The fundamental reason is that there are many people buying this type of cars and the market demand is huge.
According to Zhang Xiang's analysis, the economies of scale of best-selling models are obvious. The R&D costs, production costs, management costs, and sales costs shared by each vehicle are relatively low and more competitive.
For leading car companies, cutting prices is only reducing profits. If other car companies follow suit, it is likely to mean losses.
Zhang Xiang said, "Some leading car companies choose to shuffle their cards and crack down on competitors by cutting prices. This can achieve the desired effect."
The picture shows workers working on the new energy vehicle production line in the final assembly workshop of SAIC Motor's Ningde base.
Photo by Li Nanxuan
What are the pros and cons of “price war”?
It is obvious that for consumers, a "price war" is beneficial.
Some consumers said frankly, "There is nothing wrong with spending less money to buy a better car and enjoy more configurations." Some consumers are also worried that the "price war" will cause car companies to cut corners in invisible places. , such as choosing lower strength steel or reducing some safety configurations.
According to Yin Tongyue, chairman of Chery, the "price war" makes companies very passive. If car companies do not fight, they may lose this part of the market.
He also admitted that the price war is unstoppable.
Price cuts focus on downward capabilities, but car companies still have to strive for upward capabilities. There is a lot of room for improvement.
Zhang Xiang believes that the above two views are reasonable, but the winner in the auto market will eventually take all.
Leading car companies are well-known, have outstanding technical levels, have core competitiveness, and can survive in cutthroat competition.
Small car companies and some "new power" companies that have been losing money for years will face greater pressure.
"Learning from the experience of some mature markets, China has transformed from a big automobile country to a strong one. Automobile companies must pass the test of 'price war' and survive the fittest through competition. Without this process, China will probably not have a world-class automobile brand. This means that it may never become a powerful automobile country." Zhang Xiang said.
(over)