Since March, the price war in the automobile industry has continued to spread.
On March 14th, Dongfeng eπ007, a medium-sized and large B-class car, announced a price reduction of 30,000 yuan as soon as it was listed, and the entry price dropped to 129,600 yuan. In fact, this is just a microcosm of the price war in the automobile market since March 1.
"China Business News" reporter noted that the current price war in the automobile market is still fierce, and the "follow-up" price reduction similar to Dongfeng eπ appears frequently. Take LI as an example. On March 12th, LI announced that the prices of L7 Air and L8 Air, which were listed in February this year, would be lowered by 18,000 yuan.
New energy vehicles, which have become "price butchers", have brought a lot of pressure to fuel vehicles invisibly, and fuel vehicles have followed the pace and started to cut prices. Geely announced the launch of the Spring Car Festival in 2024 a few days ago, and its fuel vehicles such as Xingyue L, Xingrui and Emgrand all reduced their prices, ranging from 3,000 yuan to 14,000 yuan.
With the gradual decline of new energy prices, the fuel vehicle market with relatively slow upgrading and low product intelligence is under serious pressure. In this regard, many people in the industry said in an interview that in 2024, the "scissors difference" between the sales of fuel vehicles and new energy vehicles will be further expanded. Under the background of the gradual increase in the penetration rate of new energy vehicles and the decline in the cost of new energy vehicles, "the same price of oil and electricity" began to appear, and the market share of fuel vehicles may be further reduced.
More than 20 models announced price cuts
In this regard, Cui Dongshu, Secretary-General of the Association, issued an analysis, saying that as of March 15th, the price reduction scale of the automobile market in 2024 was half that of the whole year in 2023, and the price reduction models were mainly pure electric vehicles, plug-in hybrid vehicles and other new energy vehicles, while the price reduction of fuel vehicles was less.
The reporter noted that since March 7, Yantu has launched a replacement subsidy policy of 1 billion yuan, covering all its models of Lantu FREE, New Lantu Dreamer and Lantu Chasing Light, and can enjoy a cash discount of up to 50,000 yuan when buying a car.
Similarly, Chery Automobile also announced that its four major brands Chery, Xingtu, Jietu and iCAR have launched subsidy activities. Tiggo 9, Tiggo 7 Series, Arrizo 8 Series, Exploration 06, Fengyun A8 and other models can trade in up to 30,000 yuan.
It is worth noting that some fuel models of Chery Automobile have also joined the ranks of price reduction. The limited-time comprehensive discounts of Tiggo 5x, Tiggo 3x, Arrizo 5 Series and Oumengda range from 6,000 yuan to 19,000 yuan. At the same time, the Touran brand of SAIC Volkswagen also started a limited-time discount on March 1, and the price of the 2024 Touran four-wheel drive luxury and Touran X four-wheel drive luxury designated models was reduced to 279,900 yuan and 265,000 yuan. In addition, the 2.0T model of Touran family enjoys 2,000 yuan in cash or 3 years of worry-free maintenance.
According to Zhou Wenyu, deputy director of Huiyu Bohua Industrial and Commercial Enterprise Department, some mainstream car companies set aggressive annual sales targets at the beginning of the year. Under the expectation of low sales growth in the industry, "exchanging price for quantity" and seizing the market as soon as possible will still be one of the strategic choices of car companies. "The fast-growing car companies intend to pursue victory and expand market share, while the slow-selling manufacturers are unwilling to lag behind and intend to catch up. At the same time, the downward cost of upstream general raw materials and power battery materials, as well as the economies of scale brought about by the expansion of sales of independent brands, have also provided some car companies with greater room for profit. "
The fuel vehicle market may be further under pressure.
According to the data of the Ministry of Public Security, in 2023, there were 24.56 million newly registered cars nationwide, an increase of 1.33 million compared with 2022, with a year-on-year increase of 5.73%. Among them, the number of new energy vehicles reached 7.43 million, accounting for 30.25% of the number of newly registered vehicles, up 38.76% year-on-year. In 2023, the number of new energy vehicles in China has reached 20.41 million, accounting for 6.07% of the total number of vehicles. Among them, the number of pure electric vehicles is 15.52 million, accounting for 76.04% of the new energy vehicles.
Although the proportion of the total is still low, the growth rate of new energy vehicles is still relatively fast. According to the data of China Automobile Industry Association, the domestic production and sales of new energy vehicles continued to maintain a high growth rate in January and February 2024, among which the sales volume of new energy vehicles reached 1.207 million, up 29.4% year-on-year, and the market share reached 30%.
With this year’s "Government Work Report" proposing to encourage and promote the trade-in of consumer goods and boost the mass consumption of intelligent networked new energy vehicles and electronic products, in the eyes of many insiders, the sales of new energy vehicles will further increase, and the sales of fuel vehicles will be further under pressure.
"With the improvement of new energy penetration rate, as well as in the context of policy support and consumer awareness, the market share of new energy vehicles will continue to grow. Fuel vehicle manufacturers may face increasing challenges and need to maintain competitiveness through technological innovation and cost control. " Jiang Han, a senior researcher at Pangu think tank, told reporters that the development trend of fuel vehicles and new energy vehicles may be divided this year. "Overall, new energy vehicles will continue to maintain a strong growth momentum, while the market share of fuel vehicles will gradually shrink.".
Zhou Wenyu also told reporters that the performance of the automobile market in January 2024 was affected by factors such as season and sales overdraft in December last year. In the long run, as the penetration rate of new energy vehicles continues to rise, the cost goes down, and the level of intelligence continues to improve, the market share of fuel vehicles will be squeezed at an accelerated pace, and the main engine manufacturers with fuel vehicles as their mainstream products will also face the risk of accelerating transformation or being eliminated by the market.
"It is expected that in 2024, various regions will still introduce consumption promotion policies such as trade-in and new energy vehicle consumption subsidies." Zhou Wenyu said that Shanghai, Chongqing and other regions took the lead in opening a new round of automobile consumption subsidies. With the sustained economic recovery and increased consumer confidence, the excess savings accumulated by residents will gradually be converted into related consumption and investment, which is conducive to the growth of automobile sales. "
According to previous analysis, with the rapid increase in the penetration rate of new energy vehicles, the market size of traditional fuel vehicles has gradually shrunk, and the contradiction between huge traditional production capacity and shrinking fuel vehicle market has brought more intense price wars. The scale determines the cost and the survival state of the enterprise, and most manufacturers give priority to keeping their share, which will inevitably lead to further intensification of price competition.
The price war will continue
According to the analysis of the Federation, 2024 is a crucial year for new energy vehicle companies to gain a foothold. The downward exploration of new energy costs and the "same price of oil and electricity" have brought tremendous pressure to fuel vehicle manufacturers. "The upgrading of fuel vehicle products is relatively slow, and the degree of product intelligence is not too high, and it relies more on preferential prices to continuously attract customers."
"With the decline in the price of lithium carbonate, the cost of batteries has decreased, and the cost of building new energy vehicles has decreased; And with the rapid development of the new energy market, the scale effect will be formed, and the products will have more profit space. " The Federation further stated.
Cui Dongshu said that the new characteristics of new energy consumption have brought about obvious brand fission of automobile enterprises. With the gradual maturity of the market segments of various technical lines of new energy vehicles, new models have greatly enriched consumption choices, and the homogenization brought about by the increase of product supply will also intensify competition. This year’s price war is likely to be carried out in a mixed mode of price reduction promotion and positioning exploration, and new energy manufacturers will package more rights and interests to stabilize product prices.
At present, major car companies are accelerating competition on intelligent tracks. According to the White Paper on the Internet of Vehicles in China released by China ICT Institute, by 2025, the smart car market in China will be close to one trillion yuan, reaching 960 billion yuan, accounting for 56.5% of the global market. From 2020 to 2025, the smart car market in China will grow at a compound annual growth rate of 36.9%.
In the face of the trillion-dollar blue ocean, there have been a lot of R&D and investment by car companies in the field of intelligent driving. Take extreme krypton cars as an example. Recently, extreme krypton cars said that in 2024, the personnel size of the extreme krypton intelligent driving department will be expanded to more than 2,000 people, and the extreme krypton intelligent cockpit will also accelerate the iteration. "In 2024, Krypton will continue to invest and lay out the big model, and will develop the self-research ability of seamless combination of traditional voice and big model, with better understanding ability and application based on big model."
Compared with new energy vehicles, due to hardware constraints, fuel vehicles are making slow progress on intelligent tracks. How can fuel vehicles as a traditional industry boost consumption? It may be a good solution to start with optimizing management.
Cui Dongshu recently issued a document suggesting that cities with less than 4 million vehicles should gradually liberalize the purchase restriction of fuel vehicles. "At present, the car ownership in some cities with restricted purchases has lagged far behind other cities without restricted purchases. In the future, there is still huge room for growth in domestic automobile consumption. Among them, the growth potential of small and medium-sized cities and county and township markets is huge, and megacities also have room for improvement in automobile consumption. "
Cui Dongshu further stated that fuel vehicles have to pay trillions of yuan in fuel tax every year, which is not only restricted but also restricted. "In the case that the sales volume of new energy vehicles has reached 35%, we should consider the same car and the same power, stabilize the normal consumption of fuel vehicle users, and achieve comprehensive and sustainable growth of automobile consumption."
In fact, despite several rounds of price wars, the current competition pattern in the automobile market is still unclear. Zhou Wenyu told reporters that under the background of high base, new energy car companies are gradually facing the dual pressures of overcapacity and slowing demand growth. Enterprises in the industry will still experience brutal competition, and tail car companies are at risk of going out.
"At the same time, the continuous expansion of the’ Huawei’ series of cooperative brands highlights the changing pattern of the automobile industry chain." Zhou Wenyu said that the current cross-border automobile industry of science and technology enterprises indicates that the automobile industry chain is moving from a closed network to an open one. Traditional automobile host manufacturers and suppliers are facing challenges from new players, and the competition pattern is far from clear.
Source: China Business Network
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