Even with significant price reductions of the three major luxury car brands in Germany, sales in mainland China remain difficult to improve – potential buyers still hesitate. The key factor is the overall unstable economic situation in China, leading consumers to cut back on high-end spending, making it difficult for dealers to convert price discounts into actual sales volume.
Recently reported by “21st Century Economic News,” as a new energy vehicle model under BMW, the BMW i3 has become one of the most heavily discounted models within the brand, with prices plummeting. The original suggested price of 353,900 yuan has now been slashed in half, with discounts reaching up to 170,000 yuan.
“Currently, the BMW i3 can be purchased for around 190,000 yuan, which is also the most significant price drop recently,” said a salesperson at a BMW 4S dealership in Guangzhou.
Following the “Land Rover at 40% off” and “Jaguar at 30% off,” the price systems of traditional luxury brands such as BBA (BMW, Mercedes-Benz, Audi) are also facing collapse in China. BMW has halved its prices, Mercedes-Benz has taken a dive, and Audi models are dipping below 200,000 yuan. As first-tier traditional luxury car brands, BBA is becoming increasingly affordable in the Chinese market.
Amid the current economic situation, people express concerns about the economic outlook, leading many Chinese to adopt a cautious attitude towards consumption.
Many netizens in the comments section indicate that the weak consumption in mainland China is a common issue.
“Economic situation is not optimistic, we need to learn to plan and control our consumption sensibly.” “In a word, earning too little.” “It’s not that we don’t dare, we just don’t have money to spend.”
A luxury brand salesperson with over ten years of experience often reminisces about the days when luxury cars sold well. He mentioned that around 2011, newly graduated trainees quickly joined the workforce after a month of training, with Porsche and BMW customers “lining up to order cars,” with no need for extensive explanations from the sales staff.
According to incomplete statistics, in the first half of 2024, BMW and Mercedes-Benz both saw a decline in sales in China. Although Volkswagen Group did not provide specific sales figures for Audi in China, it clearly stated that the group’s deliveries in China dropped by 7.4%, with Porsche experiencing the most significant decline of up to 33%.
Apart from the massive discounts on electric cars, BMW’s fuel-powered cars’ pricing system is also struggling to maintain stability. Models like the BMW 3 Series, 5 Series, 7 Series, X1, X3, and X4 have dropped below the suggested prices, with discounts starting from 100,000 yuan, almost all products in the series are at their lowest prices.
Mercedes-Benz and Audi have simultaneously adjusted prices for their main models; the Mercedes-Benz C260, Audi A4L now have on-the-road prices around 200,000 yuan, dropping by approximately 100,000 yuan compared to the suggested prices. New energy models are generally being sold at a 60-70% discount, with the Audi Q4 quoting below 200,000 yuan, and the Mercedes EQE, originally priced at over 530,000 yuan, also reduced to around 370,000 yuan.
According to Sang Zhiwei, a member of the China Automobile Dealers Association Expert Committee, BBA’s average transaction prices have been declining year after year. In 2021, it was the year with the highest weighted average transaction price for BBA, with Mercedes-Benz, BMW, and Audi at 464,000 yuan, 461,000 yuan, and 337,000 yuan, respectively. In April this year, these figures dropped to 434,000 yuan, 351,000 yuan, and 301,000 yuan, respectively. The 300,000 yuan mark is just the “passing line” for luxury cars.
Price cuts have hurt the net profits of BBA. In the first quarter of this year, with the chaotic pricing, BMW, Mercedes-Benz, and Audi profits once again dropped by 24.6%, 30%, and 58.4%, respectively.
BMW’s global sales for the first half of the year reached 1.096 million vehicles, a year-on-year increase of 2.3%, but in the Chinese market, it dropped by 4.2% to 375,900 vehicles.
Audi’s brand’s total sales for the first half of the year fell by 8% to 833,000 vehicles; Porsche’s global sales for the first half of the year decreased by 7% to 155,900 vehicles, with the Chinese market experiencing a particularly significant decrease of one-third.
The strategy of exchanging price for volume did not yield results. As traditional first-tier luxury car brands, BBA is becoming increasingly affordable in the Chinese market. However, even with discounted promotions, some customers still hesitate to make purchases – either fearing being “stabbed in the back” after delivery or worrying about depreciation issues.
The China Automobile Dealers Association released data showing a 3% decrease in BMW’s used car resale value in June.
As the first half year closes, news circulated that severe losses in stores due to a “price war” resulted in BMW China deciding to withdraw from the year-long “price reduction to maintain market share” strategy. Starting from July, they plan to stabilize prices by reducing sales volume to relieve the operational pressure on stores.
Although only Volvo has disclosed its “report card” for the first half of the year in China so far, looking at retail terminal data, the entire second-tier luxury market is gradually being lost.
Represented by the Ideal brand, independent high-end brands begin to eat into the luxury market share. However, in the first half of this year, Ideal Motors delivered a total of 1,889 vehicles, still lagging behind BBA’s sales in China.
Ideal Motors’ sales have fallen short of expectations this year, prompting the company to lower its annual sales target to 560,000 to 600,000 vehicles. Achieving success in the Chinese luxury car market with this performance will be challenging.
It is undeniable that in terms of market share, BBA remains strong in China, but growth has slowed or even declined, creating a gap in electrification compared to independent brands.