China’s car market has been in a long-term state of losses, with the overall retail losses in the new car market totaling billions of RMB in the first 8 months of this year. A senior executive at Huawei, which has deep partnerships with several Chinese car companies, recently admitted that every new car sold incurs a loss of 30,000 RMB.
At the Huawei Autumn Full-Scene New Product Launch event on September 24th, Yu Chengdong, Executive Director of Huawei, Chairman of the Terminal BG, and Chairman of the Intelligent Car Solution BU, announced the official launch of the Smart Screen R7, introducing three models with prices ranging from 259,800 to 339,800 RMB.
Yu Chengdong stated at the event: “The price of the Smart Screen R7 is very sincere, with a loss of 30,000 RMB for every car sold.”
It is worth noting that when introducing the Ask Boundary New M7 in August this year, Yu Chengdong also mentioned that selling a basic model of the M7 Pro incurs a loss ranging from more than 20,000 to 30,000 RMB.
The Smart Screen R7 is positioned as a pure electric sedan SUV, the second model jointly created by Huawei and Chery, and the first sedan SUV of the Harmony Intelligent Travel, equipped with HUAWEI ADS 3.0 advanced intelligent driving. Yin Tongyue, Secretary of the Party Committee and Chairman of Chery Holding Group, mentioned that Chery has invested over 10 billion RMB in the Smart Screen project.
In fact, it is not only the Smart Screen R7 that is experiencing sales losses. Two other electric car companies that have deep partnerships with Huawei are also facing massive losses.
In the past three years, Beiqi Blue Valley under the Beiqi Group has continuously been in a state of loss. As of the middle of last year, Beiqi Blue Valley had accumulated a total loss of over 19.1 billion RMB in three and a half years; and the financial report released by another electric car company, Ceres Group, collaborating with Huawei, shows that Ceres incurs an average loss of 14,000 RMB for every car sold.
During the new product launch event, Yu Chengdong also mentioned that the Smart Screen R7 competes with the Tesla Model Y. However, challenging the Tesla Model Y with the Smart Screen R7 is not easy.
According to Daily Economic News report, other models previously announced to compete with Tesla Model Y, like Xiaopeng G6, Ji Yue 01, Haobai HT, and Tengshi N7, have shown relatively average market performance, with no model having a monthly sales volume exceeding 10,000 units.
In reality, new energy car companies supported by the Chinese government have been in a long-term state of losses.
On September 23rd, the China Automobile Distribution Association (referred to as the Distribution Association) WeChat public account stated that in a recent period, the continuous “price war” and other factors have brought about drastic changes in the car market, causing car dealers to be deeply stuck and facing a prominent issue of extremely tight liquidity.
In response, the Distribution Association recently submitted a report to relevant government departments. The report cited monitoring data showing that from January to August this year, the “price war” has led to an accumulated retail loss of 138 billion RMB in the new car market, significantly impacting the healthy development of the industry.
Chinese media reported that this year, due to the unbearable burden brought by the “price war,” many dealers have been struggling. In September alone, two car dealers were reportedly unable to license new cars or had their dealership agreements terminated by the brand for various reasons.
Among them, G.A. Group, which operates high-end brand car dealership businesses, was exposed to breaking of the financial chain due to poor management, failure to redeem qualified certificates for customers, payment overdue, and other reasons, leading to the cancellation of dealership agreements with a luxury brand.