BYD insists on the price war, and friends are angry! Who is ironically "cutting corners"?

Electric car commune

2024-06-21 02:24Posted on the official account of Beijing Electric Vehicle Commune

Nearly half of 2024 has quietly passed, and if you use one word to summarize the state of the entire rim in the first half of 2024, it must be the word "volume".

At the 2024 China Automobile Chongqing Forum held some time ago, a group of car circle bigwigs had a fierce confrontation on the topic of "volume", and the smell of gunpowder was extremely strong!

Zhu Huarong, chairman of Changan Automobile, expressed his support for the industry's "volume" as soon as he came up.

"Volume is the normal process of good money driving out bad money, and it is the best way for the industry to quickly return to healthy competition. The volume itself means the pursuit of excellence, the new height of the Chinese brand, and the maximization of the user's interests.

In the next decade, more Chinese brands will inevitably become world-class brands. ”

Who would have thought that Zeng Qinghong, chairman of GAC Group, who was the second to speak, immediately came to the stage to retort:

"It's not a way to roll down, it's not profitable! What is the purpose of the business? It's profitable! Contribute to the country, contribute to society, pay taxes, and get jobs. We should have a big picture and focus on long-termism, rather than focusing on the immediate roll.

Now the development of new energy vehicles has been 10 years ahead of the national strategy, and many foreign friends of Toyota and Honda are stupid. Here it is suggested that the competent authorities should really consider studying the same rights of oil and electricity when the day comes to 50% of pure electric vehicles. ”

On the second day of the forum, the war of words about involution also became more intense.

Wang Chuanfu, the "initiator" of the price war, also expressed great approval of the "volume":

"Volume is a kind of competition, is the essence of the market economy, and only competition can produce prosperity. All entrepreneurs (in the automotive industry) should embrace and participate in this "volume" and embrace this kind of competition.

The mobile phone and home appliance industry has gone through several rounds of elimination, and the rest are world-class companies, and the automotive industry will follow this pattern. ”

In other words, BYD takes the first step, and all peers continue to work hard!

Li Shufu, chairman of Geely Group, who was unable to attend in person, expressed his views on "opposing unhealthy involution" through an online speech:

"Involution is both a good thing and a bad thing. If the level of marketization is high, the law is sound, the law is strictly enforced, and the competition is transparent and fair, this is a good thing, and vice versa. If any industry wants to develop healthily, it must be able to achieve a good input-output ratio.

The result of a simple and crude price war will inevitably be cutting corners, counterfeiting and selling, and disorderly competition that does not comply with regulations. ”

With Li Shufu's foreshadowing, Yang Xueliang, vice president of Geely Group, pushed the boat down the river and further emphasized the anti-involution attitude.

"Geely also went through the stage of building low-cost cars, but then we found out that this thing was not sustainable. Now we must improve the quality, not shoddy, cut corners, and fight the 'moral war' of the enterprise.

In the last two years, the average transaction price of a car has fallen by 25%, which is not normal for the whole world. In addition, all kinds of traffic and water armies have caused the industry to become a miasma, which has led to many car companies collectively sliding into the involution and unable to extricate themselves, and the development is also unsustainable.

Meaningless or excessive volumes make it difficult to win the respect of others. ”

Although Yang Xueliang's speech did not name names, seeing the words "shoddy, cutting corners", some netizens may begin to associate with a series of events.

Li Yunfei, general manager of BYD brand public relations, said this:

"I especially agree with the 'moral warfare' mentioned by Xueliang. Two or three years ago, when the price of battery raw materials and subsidies for new energy vehicles were rising, the industry was rising, and we were also rising.

What now? Look at what the price of battery raw materials has fallen! When the price of the battery rises, it is sworn that the price of the car will rise, why not reduce the price of the battery? Ask yourself, is this immoral?

When it comes to price wars, every business is different in size and situation. But there is a prerequisite called doing what you can. Most of the people in the industry are listed companies, and their finances are transparent. You lose money, and everyone can see it.

It's like sitting at a table playing cards, someone plays cards, you can follow it, and you can't follow it. Don't be angry, don't flip the table. There's the next game, and it's not like it's over right away. The next product, let's move on to the next game. ”

In general, when this kind of-for-tat situation occurs in the car rim, it is natural that the figure of "Yu Dazui" is indispensable.

Although Yu Chengdong did not personally participate in the Chongqing Auto Forum, he responded to the involution in a recent live broadcast, and his attitude was as sharp as ever:

"I have never seen car companies that go far by low-price competition, only people without the level will fight a price war, because their own competitiveness is not good, it is a last resort. Some Chinese companies are overly keen on low-price competition, but this strategy actually comes at the expense of product quality and user experience. ”

Combined with Yu Chengdong's views at the Future Automobile Pioneer Conference on June 1 - "The world's No. 1 volume king should be BYD, they have ultra-low costs." We are not good at rolling ultra-low prices, we are still good at rolling value", which brought many netizens the feeling of "BYD volume price, Huawei volume value".

And Li Yunfei happened to pay attention to Yu Chengdong's speech, and replied during a test drive live broadcast: "In my impression, Huawei has also lowered its price twice in the past year or two, and the price reduction is also quite ruthless, isn't this also the price of the volume." ”

In addition to these bigwigs, Li Bin, chairman of Weilai Automobile, also expressed his opposition to price wars on involution.

He believes that "the volume of the automobile industry is very normal, and it is the inevitable result of market competition, but the price of only the volume is indeed a little low." ”

Great Wall Motors, which openly reported BYD last year, also stood up and shouted at the press conference of the new Haval H6:

Li Ruifeng: "But if there are people on the table and cards, the Great Wall will issue an early warning, stand up to "knock on the table" or even "flip the table". ”

For a while, it seems that most of the voices opposing the price war have pointed the finger at BYD, which is a bit of a "siege of Guangmingding" in the car circle.

Who said that in the past two years, BYD has not stopped for a moment in terms of volume prices. first shouted that oil and electricity are at the same price, and then shouted that electricity is lower than oil, and directly reduced "998 Qin" by 20,000 yuan to "798 Qin", and then used various champion editions to refresh people's perception of the lower limit of the car price.

Last month, BYD released the Qin L and Seal 06 DM-i, which have an official fuel consumption of only 2.8L per 100 kilometers with the blessing of the fifth-generation DM technology, and the pricing of "998" once again refreshed the lower limit of the mid-size sedan.

One thing to say, the BOM cost of taking goods from suppliers in the automotive industry is basically transparent, and the price of 5% is already a very big gap.

Seeing that BYD can easily bring down the price, people in the industry are indeed prone to the idea of "BYD is cutting corners".

Now, in full view of friends and businessmen, any mistake made by BYD may become a lever for friends to attack BYD.

But there is no basis for words, and before grasping the key evidence, we can only admit that BYD has the "guiding pricing power" of the entire industry through large-scale, self-research and self-manufacturing, etc.

Interestingly, there were already voices of opposition to the increasingly fierce involution and price war in the car circle as early as last year.

In July last year, under the leadership of the China Association of Automobile Manufacturers, 19 car companies, including FAW, SAIC, Geely, Great Wall, BYD, NIO, Ideal, Xiaopeng and Tesla, jointly signed the "Commitment to Maintain Fair Market Order in the Automobile Industry".

As a result, the last sentence of the first clause in the letter of commitment, "not to disrupt the order of fair competition in the market with abnormal prices", was complained by many netizens, believing that it was suspected of violating the "Anti-Monopoly Law".

And Tesla, which has signed the "letter of commitment", came to an official announcement of a price cut the next day, which is equivalent to signing a lonely sign.

Subsequently, the China Automobile Association subsequently added a red-headed document and deleted the expression "price" in the letter of commitment.

What happened later should be clear to everyone, the rim price war did not stop there, but continued round after round until now.

More than a year has passed now, and the price reduction of the car rim has finally eased, and at the same time, at the Chongqing Auto Forum, the voice of opposition to the price war and involution is getting louder and louder.

This illustrates a problem, there are already players who are exhausted and can't roll.

According to the data given by the China Passenger Car Association, although the overall sales performance of China's auto industry in the first four months of this year was good, sales revenue and profits were increasing, the profit margin continued to decline, has decreased to 4.6%, the lowest level in the past seven years.

Reflected in the profit of bicycles, it has fallen from 23,000 yuan 7 years ago to only 16,000 yuan.

The continuous decline in bicycle profits has undoubtedly caused huge pressure on car companies, and it has indeed been reflected in the financial reports of many car companies.

Take the GAC Group, which denounced involution at the beginning, for example, the revenue in the first quarter of this year fell by 18.79% year-on-year, the net profit fell by 20.65% year-on-year, and the net profit fell by 2 percentage points, leaving only 5.66%.

The reason why Zeng Qinghong wants to mention Toyota and Honda is precisely because of BYD's price war strategy, which has dealt a heavy blow to Japanese cars with the advantage of fuel economy.

A closer look at GAC Group's March sales briefing shows that the cumulative sales of the two joint ventures of GAC and Toyota-Honda in the first quarter decreased by 21.74% and 29.09% respectively compared with last year. These two joint ventures are already half of the country for GAC Group.

Therefore, there is a reason why they will stand up and shout "anti-involution".

Of course, it can also be understood that the "same rights of oil and electricity" called by Zeng Qinghong, chairman of GAC, is not only fair competition in the market, but also for the sake of corporate profits.

After all, at this stage, selling fuel vehicles or hybrid range extenders (with fuel tanks) is indeed more profitable than pure electric vehicles. Brands such as Leap, Nezha, Chang'an Deep Blue, Chang'an Qiyuan, Dongfeng Yipai, and Lantu have also adopted the strategy of selling pure electric + extended range together.

As for the players who oppose the price war, it is not unreasonable to worry that there may be a decline in product quality, leading to a vicious circle of "bad money driving out good money".

After all, the price pressure borne by car companies will eventually be transmitted to upstream parts suppliers.

An industry insider said, "Now many third- and fourth-tier suppliers have been impacted, and in order to improve performance, they have to divest their unprofitable businesses." ”

Some people in the industry said, "If the price war continues, the ultimate trend must be to reduce the specifications of parts, and the ultimate victim is still consumers." ”

In this process, even if the car companies themselves can guarantee to keep the "moral bottom line", can they ensure that the suppliers also keep the "moral bottom line"? Obviously, the matter is not as simple as it seems.

 Write at the end

After this round of-for-tat about the involution of the rim, will the price war end here?

The president thinks no, and the price war will continue.

First, because China is different from the traditional powerhouses of the automobile industry such as Europe, the United States and Japan, every family should have a car. There are still a large number of people in China who have never owned their first car, and in the face of huge demand, good quality and low price are expected.

Second, as long as there are players in the automotive industry who are willing to fight a price war, other players will be led by the nose regardless of whether they are willing or not. Car companies that denounce price wars do not necessarily have the ability to fight price wars, and the trick of "not learning on the surface, taking the first place in the exam" is also applicable to the competitive strategy of car companies.

As for whether the price war will affect the overall product quality, it still depends on the "moral bottom line" of the initiator of the price war, and the quality management of the regulatory department is also very important.

But in any case, the final result of involution is to form the last elimination, and no player in it can be left alone, and the reality is often more cruel than imagined.

Natural selection, survival of the fittest, survival of the fittest, the law of the jungle – Darwin's On the Origin of Species.

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