The Chinese automotive industry has been in a price war for several months, which not only failed to bring the expected market benefits to foreign car companies in China, but also caused huge losses to the value of car brands. Recently, international luxury brands such as BMW, Mercedes-Benz, and Audi have all withdrawn from the price war, while brands like Volkswagen, Toyota, and Honda have also followed suit, putting an end to the “price reduction to maintain market share” strategy.
According to reports from the First Financial and China Securities News on the 17th, due to the severe losses incurred by dealerships in the luxury car market as a result of the price war, Mercedes-Benz, BMW, and Audi, which dominate the luxury car market, have recently withdrawn from the price war.
Several BMW dealerships in the Eastern region stated that starting from the third quarter, BMW China and BMW Brilliance have canceled sales volume targets for dealerships in the East. As a result, BMW dealerships have reduced inventory pressure, decreased terminal price promotions, and the average selling price per car has increased by around 13,000 yuan.
A salesperson from a BMW 4S dealership revealed that prices for all BMW products have increased, ranging from 30,000 to 50,000 yuan.
Similarly, a salesperson from a Mercedes-Benz 4S dealership mentioned that they are losing 70,000 yuan for every C-Class car sold, a situation that is not sustainable. Currently, Mercedes-Benz prices are relatively stable, but are expected to increase in the future.
Additionally, a dealer of Audi mentioned that prices for popular models such as Audi Q5L, Audi A6L, and Audi A4L have seen slight increases, with the possibility of further increases in the future.
It has been reported that BBA (BMW, Mercedes-Benz, Audi) are about to completely withdraw from the “price war.”
Due to weak demand and the drag from electric vehicles within the same brand, BBA’s fuel cars have also started significant promotions.
It is worth noting that sales of other international luxury car brands in the Chinese market are also declining, with Porsche showing a particularly noticeable downward trend. Porsche explained that this is mainly due to factors such as the price-oriented nature of the Chinese market.
Behind the price reductions of luxury brands, market demand is decreasing, leading to significant inventory pressure for dealerships. A survey of China’s automobile dealership inventory warning index showed that in June, the inventory warning index was at 62.3%, above the boom-bust line, indicating that dealerships continue to face significant inventory pressure.
This implies that trading market share for prices seems to be very difficult. At the same time, continuing significant price reductions will undoubtedly cause huge losses to the brand value of luxury cars.
Furthermore, according to reports from Red Star Capital on the 17th, brands such as Volkswagen, Toyota, Honda, and Volvo have decided to adjust terminal policies starting from July, reducing terminal incentives or no longer further reducing prices.
At the 2024 China Auto Forum, executives from Geely, Chery, Jianghuai and other automakers have also called for moving away from internal competition and price wars, and focusing on brand enhancement.
Li Yanwei, a member of the Automobile Circulation Association’s Expert Committee, pointed out that BYD’s focus on quantity over price has sparked a spiral decline in new car prices. He emphasized that the impact of Chinese new car manufacturers on luxury car prices is not decisive; instead, the approach of BBA is the most crucial.