Entering the year 2025, shortly after the start of the new year, in a bid to seize market opportunities, several Chinese car manufacturers have launched price wars. Some car manufacturers have lowered their prices by up to 170,000 yuan (renminbi, RMB).
Ideal Automobile recently announced the launch of a replacement subsidy bottom-line equity, applicable to consumers who order new cars and make deliveries from January 1st to 31st this year, meeting the conditions of Ideal Automobile’s replacement subsidy bottom-line equity.
The announcement stated that until March 31st this year, consumers who did not receive local replacement subsidies at the location stated on their car purchase invoice or did not meet the local replacement subsidy conditions could enjoy a cash subsidy of 15,000 yuan provided by Ideal Automobile.
FAW-Volkswagen announced that until January 31st this year, consumers who purchase Volkswagen brand new cars through replacement (including scrapping) at FAW-Volkswagen dealerships are eligible for cash compensation from FAW-Volkswagen if local authorities do not issue scrapping or local replacement subsidies before March 31st this year.
According to the Beijing Business Daily, since the beginning of this year, over 10 car companies including NIO, Leahead, BYD, Xiao Peng Motors, Ideal Automobile, Dongfeng Fengshen, SAIC Volkswagen, Geely Automobile, Lantu Automobile, AETAA, Jihu, and Deep Blue have successively introduced “bottom-line” policies to compensate consumers.
In addition to providing consumers with subsidies, some car companies aim to stabilize sales by opting for price reductions and engaging in price wars.
On December 24th last year, Tesla’s Chinese official website launched a “Select and Immediate Discount” policy, offering a 10,000 yuan immediate discount on the purchase of Model Y vehicles. Additionally, customers can benefit from a five-year 0% interest financial plan until January 31, 2025. On December 27th, BYD announced a limited-time promotion for the Qin PLUS EV Glory Edition and the second-generation Song Pro DM-i models, offering a 10,000 yuan discount on both models. Besides direct price discounts, BYD also provides high replacement subsidies for these two models.
Statistics show that over 30 brands have implemented price reduction policies, including Chery Automobile, GAC Aion, Geely, Changan Mazda, FAW Toyota, FAW-Volkswagen, Dongfeng Honda, Dongfeng Peugeot, Dongfeng Citroën, Geek+, SAIC GM, Haval, and many others. These car companies utilize methods such as reduced insurance premiums, point redemptions, replacement subsidies, and cash discounts to attract consumers to purchase.
Furthermore, joint venture brands have introduced price reduction benefits. For example, the limited-time prices for FAW-Volkswagen’s Tanyue model start from 139,800 RMB, the Ma 200,000 vehicle crowd edition starts from 139,800 RMB, and the Bao Lai starts from as low as 79,800 RMB. A dealer of Dongfeng Honda stated that the manufacturer has introduced limited-time special offers for four models: Lingxi L, CR-V, Insight, and Civic. Among them, after combining cash discounts, insurance subsidies, and replacement subsidies for the Insight model, the total limited-time offer for the model reaches 57,000 RMB.
Luxury brand markets also provide varying degrees of price concessions. BMW, Mercedes-Benz, and Audi models offer discounts, with Audi models offering discounts averaging around 73-75% of the terminal price. A salesperson from Jaguar Land Rover mentioned that prices for the XEL under Jaguar have decreased to 189,800 RMB and the XFL model to 269,800 RMB. Compared to the official guide prices of 329,800 RMB for XEL and 439,900 RMB for XFL, the current prices have been reduced by 140,000 RMB and 170,000 RMB, respectively.
At the beginning of the new year, various car manufacturers have successively launched promotional policies. According to the China Passenger Car Market Information Joint Council Forecast Association (CPMA), it predicts a 2% year-on-year growth in the Chinese car market this year, signaling a more intense competition among the car companies.
Although the CPMA predicts a 2% year-on-year growth in the Chinese car market, international organizations hold a different view.
Sam Fiorani, Vice President of AutoForecast Solutions, a global automotive production and sales company, stated to The Wall Street Journal that due to the overall economic slowdown in China, car sales in China in 2025 may decline.
The Wall Street Journal on January 9th reported that He Xiaopeng, CEO of Chinese automaker Xiaopeng Motors, said in an internal email sent on December 31, 2024, that “2025 to 2027 will be a competition for the (Chinese) automotive industry. Competition in 2025 will be fiercer than ever.”
NIO Motors CEO, Li Bin, also mentioned in December last year that “car companies must not have any weaknesses” as the industry has entered the “most competitive and brutal stage of competition.”
Simultaneously, Chinese car manufacturers are facing challenges in overseas markets. In October 2024, the European Union imposed tariffs of up to 45% on electric vehicles manufactured in China, and the Biden administration also implemented 100% tariffs on Chinese electric vehicles in the same year.
All these signs indicate that the price war among Chinese car companies will continue this year.