Against the background of the impact on sales at the end of the year, price reductions by car companies have become commonplace.
Xpeng G6
On December 18, Xpeng Motors officially announced a price reduction, saying that in December, the entire Xpeng G6 series will be discounted by 10,000 yuan for a limited time, and the starting price will be reduced to 199,900 yuan.
It should be noted that this G6, which is called Xiaopeng's "life-saving straw", has only been on the market for less than half a year, which shows that its sales pressure is huge. Sales data shows that from July to November, the delivery volume of Xpeng G6 climbed from 3,937 to 8,750 units. It has always accounted for nearly half of Xpeng Motors’ monthly delivery volume, which is of great significance for Xpeng Motors to get out of the trough. .
However, industry insiders revealed to reporters that the sales of Xpeng G6 are gradually peaking. After entering December, the weekly sales volume has been less than 2,000 units, while its previous weekly sales volume was more than 2,000 units.
In fact, it is not only the new G6 car that has been reduced in price. The entire Xpeng P7i model series started a price reduction promotion in early December, with a comprehensive discount of up to 26,000 yuan. Later, the Xpeng G9 also followed up with a price reduction, with a maximum discount of 19,000 yuan.
Xpeng Motors’ goal of stimulating sales is obvious. At the beginning of 2023, Xpeng Motors CEO He Xiaopeng mentioned in an internal letter that the delivery target for 2023 is to deliver nearly 200,000 vehicles throughout the year. In the first 11 months of this year, Xpeng Motors' cumulative delivery volume was only 122,000 vehicles, completing 60% of the full-year target.
Nearly 20 brands have officially announced price cuts in December
Like Xpeng, car companies in the Chinese automobile market are facing sales pressure. The wave of price cuts in December was started by BYD.
On December 1, BYD announced that owners of fuel vehicles or prospective owners of fuel vehicles who have placed an order can enjoy a "fuel transfer fund" of up to 20,000 yuan; they can enjoy discounts of 5,000 yuan to 18,000 yuan when purchasing some models of Haiyang.com . This is BYD's second major discount in two months.
Followed closely, Li Auto announced the launch of a limited-time annual rate of 2.5% in December, and relevant models can receive up to 36,000 yuan in subsidies.
On December 1st, Leapmotor announced that it would launch a limited-time offer at the end of the eighth anniversary year in December. For its C11 model, those who pay a deposit of 5,000 yuan can enjoy a cash discount of 5,000 yuan, a supreme optional fund of 5,000 yuan, and a supreme financial discount of 8,000 yuan, etc. .
Zhiji Auto also announced on December 1 that you can enjoy comprehensive discounts worth 37,600 yuan when you order a Zhiji LS6, including an immediate discount of 12,000 yuan in cash rights and specific limited-time rights prices.
Deep Blue Automobile, a subsidiary of Changan, announced that users who place orders from December 1st to December 17th can enjoy a deposit of 1,999 yuan for all models, which can be used to offset the purchase price of 8,000 yuan. Deep Blue's brother brands Qiyuan and Changan UNI have also launched discounts worth tens of thousands of yuan.
In addition, independent brands including Nezha, Jikry, Geely, GAC Trumpchi, etc., as well as joint venture brands such as FAW Toyota, FAW Volkswagen, GAC Toyota, SAIC Volkswagen, SAIC-GM, SAIC-GM-Wuling, etc., have also successively officially Relevant promotions were announced. According to incomplete statistics from The Paper reporters, nearly 20 brands officially announced price reductions in December alone.
The price war in the auto market lasted throughout the year, and the industry started a "meat grinder" mode
In January 2023, Tesla fired the first shot of price reduction in the new energy market, followed by Xiaopeng, Wenjie and other manufacturers to follow up; In March, the fuel vehicle price war started by Dongfeng Motor spread across the country. At that time, many industry experts stated that the price war would not last throughout the year. However, it now appears that "price war" has actually become the norm in the auto market throughout the year.
On December 18, Zhang Yong, CEO of Nezha Automobile, issued an article criticizing the price reduction and promotion practices of car companies, saying, "When our domestic car companies are still doing a weekly data ranking to show how many more cars they have sold than others, others are Make a fortune silently. If the growth of data comes at the expense of profits or even negative gross profits, this growth is worthless."
"Marketing communication expenses to increase exposure need to be increased. But for the sake of momentum, Substantial price reductions and promotions increase losses and result in too much blood loss. We will no longer do this kind of thing." Zhang Yong added that exchanging price for volume resulted in "puffiness."
However, exchanging gross profits for sales is a choice that many car companies have to make. The automobile industry is a strongly product-oriented industry and adheres to the principle of "sales are justice". Auto companies are often criticized due to declining sales, and then encounter a reputation crisis.
Cui Dongshu, secretary-general of the Passenger Car Association, pointed out, "In order to maintain sales levels, some car companies have relatively strong price promotions at the end of the year. Using profits to offset sales is also to ensure the effective operation of all links in their industrial chain."
Industry insiders believe , the automobile industry has started a fierce "meat grinder" mode, and "shut down and switch" will be a problem that most car companies have to face.
Chen Yudong, President of Bosch China, recently said that now that car companies are able to sell cars through price cuts, it means that the volume is not enough. If the car companies lose money every year, the bleeding is over, and a large number of people "die", it will be called real volume. . He believes that 80% of China's vehicle companies will face "shutdown and transfer" in the next five years. Previously, car company executives including Zhu Huarong, chairman of Changan Automobile, also expressed similar views.
Looking forward to 2024, car companies generally expect that the survival situation will be more difficult. NIO CEO Li Bin recently stated that the market will be even more brutal, reminding employees to “give up their illusions about the intensity of market competition.” At the previous Guangzhou Auto Show, many car company executives publicly stated that price war will still be the main theme of the auto market in 2024. Liu Jie, vice president of commercial affairs of Li Auto, judged that 2024 will be a critical stage in the "elimination competition" of new energy; Yi Han, vice president of marketing of Xpeng Motors, predicted that price war has become an irreversible trend.
market institutions have different expectations for next year.
SDIC Securities predicts in its latest research report that the profitability of vehicle companies is expected to continue to rise in 2024. First, the number of new models in 2024 will be relatively small, competition will tend to be moderate, and the probability of further discounts from joint venture car companies is low. Self-owned brands have less pressure to cut prices; secondly, the sales structure is expected to be further upgraded, with high-end models driving up profits; thirdly, the price of raw materials such as lithium carbonate has dropped, vehicle companies have continued to iterate their technologies, and their ability to control suppliers has strengthened, and costs are expected to continue to decline.
Recently, Fitch Ratings stated in a research report that competition in China's auto market will continue to intensify in 2024. Fitch believes that intensified competition may put pressure on the market share and profitability of Chinese automakers in the short term, causing them to face higher investment needs while weakening their cash generation capabilities; joint venture automakers may continue to face challenges, and some Leading joint venture car companies will regain market share with their aggressive electric vehicle transformation goals, but their profitability will weaken due to lower profit margins on traditional fuel vehicles and increased exposure to low-profit electric vehicle business.
