In the domestic auto market, where "price wars" are up and down, even those traditional European car companies that have always been known for their brand value are difficult to stand alone, and typical examples of failure to keep the "bottom line" in this regard are luxury brands Porsche, BMW, and of course, Geely and Mercedes-Benz jointly created the brand smart.
The executives of the smart brand have repeatedly declared that they will not follow the trend and reduce prices, but the result of this is that the sales of smart have "halved" from January to May this year. According to the insurance data, the number of smart vehicles insured in the first five months was only 9,099, a year-on-year plunge of 53.6%, which can be described as a proper "sales" halved.
It may be that it recognized that the "crisis" was in sight, and smart, which had always claimed that it would not reduce prices, later began to reduce prices: in April this year, smart reduced the prices of its two pure electric cars, the Elf #1 and the Elf #3, respectively, in the name of launching a facelifted new car, and the explanation of smart executives is that this is an adjustment to the price and configuration according to user needs, not a price reduction.
However, even though these two new cars have a discount of tens of thousands of yuan compared with the old cars, their effect on sales is very limited. In May, after the launch of the facelifted new car, smart's sales were 3,327 units, although it increased month-on-month, but this month's sales were only barely enough to reach the lowest point of monthly sales in the same period last year, and it is still difficult to say whether it will be sustainable.
Perhaps, in the case that the price reduction still cannot fundamentally change the decline in sales, smart really needs to seriously think about how to survive in China and other overseas markets.
The price of not reducing the price - sales "halved"
Before we say smart, it's important to know a little bit about its history. According to public information, smart is a brand of Smart Motor Automobile Co., Ltd., which was established in December 2019 and is jointly funded by Geely Automobile Group Co., Ltd. and Mercedes-Benz Co., Ltd., with both parties holding 50% of the shares. Prior to this, smart, as a luxury brand under Mercedes-Benz, has been committed to intensive cultivation in the field of boutique mini cars, focusing on customizable two-door or four-door mini cars, which has a high reputation around the world. In the era of gasoline vehicles, smart has few competitors due to its precise positioning, but this also makes it a niche brand that has never been able to grow in a larger market.
In fact, now the domestic smart not only adopts a new chassis and design, but also fully electrified, which is equivalent to starting from scratch. At present, smart has two electric vehicles in China, namely smart Phantom #1 and smart Phantom #3: in April 2022, smart launched the first pure electric car after the refresh, smart Phantom #1, with the highest monthly sales of more than 5,000 units; In June last year, smart launched the smart Phantom #3, which sold 2,400 units in July. Both models are built on Geely's SEA platform, with Mercedes-Benz Design responsible for styling and Geely-controlled Zhejiang Haoqing Automobile for vehicle manufacturing.
However, the sales of these two smart cars are a bit "anticlimactic", that is, the sales are good at the beginning, and the sales are getting worse and worse later. This shows that the brand did not form word-of-mouth support after the first batch of users tried it, and could not drive continuous sales growth. In fact, many users have bought smart before, mainly because of its brand and appearance, the problem is that if a car wants to gain a good reputation, it is definitely not enough to rely on brand and appearance. At present, smart's domestic sales are mainly Elf #1, even so, its total sales this year are only a pitiful 6243 units, as a comparison, Elf #3 sales this year are 2673 units.
Third-party platforms show that the Phantom #1 is a small SUV and the Phantom #3 is a compact SUV. What is puzzling is that although there are differences between the two models, the prices are very close, the price range of the former is 154,900-284,900 yuan, and the price range of the latter is 164,900-289,900 yuan, and the prices of the two cars almost overlap. This can't help but make people wonder: in the case of poor sales, the overlapping prices of the two will make them more "internal friction" in sales?
However, even if the sales volume is "high and low", smart still claims that it will not reduce prices. Yi Han, CEO of smart China Marketing Company, previously said: "The price of the volume is not as good as the value of the volume, especially for a brand like smart, we should give priority to providing emotional value." In addition, Tong Xiangbei, CEO of smart Global, said something similar at the Chengdu Auto Show in August last year: "In order to maintain the high value of the smart brand, we will not participate in price wars." ”
The meaning of the two boils down to one sentence: since smart is a brand owned by Mercedes-Benz, its biggest advantage is brand value, in order to maintain brand value, smart can not participate in the domestic "price war". It's just that when many European luxury brands, including Porsche and BMW, have to cut prices, how much is smart's brand value left now? In the case that independent brands provide more choices, brand value is no longer an advantage, but is considered to be "cutting leeks".
Insisting on not reducing prices, it finally made smart pay the price of a sharp decline in sales, and at the same time made it realize the fact that in the face of survival, brand value does not matter at all. According to the data provided by the China Passenger Car Association, the cumulative sales volume of smart in 2023 will be 67,000 units, of which 42,000 units will be sold domestically and 24,700 units will be exported. In other words, smart's domestic annual sales last year were even worse than the monthly sales of some leading new forces.
This year, smart's sales decline is even more obvious. From January to May this year, the number of smart vehicles insured was only 9,099, a year-on-year plunge of 53.6%, and the sales volume was properly "cut in half". Almost halfway through this year, the upper limit of smart has not even reached 10,000 units, which means that it has gradually moved away from the goal of "50,000 vehicles for 60,000 vehicles" set at the beginning of the year.
In the face of survival, smart finally reduced the price in disguise
Probably recognizing that if this continues, it may encounter the risk of "delisting", smart launched a new version of the Elf #1 and Elf #3 on April 14 this year, compared with the previous old version, the new model has changed in terms of price and configuration.
Specifically, the two cars each have 3 configurations, depending on the configuration, the official retail price of the smart Elf #1 is 154,900-199,900 yuan, and the official retail price of the smart Elf #3 is 164,900-219,900 yuan. Among them, the price of smart elf #1 has been reduced by 24,100-26,000 yuan compared with the old model, and the price of smart elf #3 has been reduced by 3.6-56,000 yuan compared with the old model. It is worth mentioning that the two cars are still available in performance versions, priced at 284,900 yuan and 289,900 yuan respectively.
Some industry insiders believe that smart's move seems to be launching a new car, but in fact it is a disguised price reduction in the name of the old car facelift, after all, many senior executives of smart have previously expressed on different occasions that they will not reduce prices, and if the price is reduced directly on the old car, it will inevitably be embarrassing.
In the face of the outside world's doubts about the "disguised price reduction", Tong Xiangbei gave an explanation: "We are not adjusting the price, after two years of operation in the Chinese market, we have a deeper insight into the needs of users and car scenarios. We have adjusted the configuration of Genie #1 and #3 according to the different needs of users, and tailored them according to user habits and needs, which is our strategy. ”
Tong Xiangbei's implication is that the reason why the price of these two cars is lower than before is only because their configuration is lower, and the reason why the configuration can be reduced is because after our investigation, we found that some of the previous configurations were unnecessary for Chinese users, so everything we do is based on the real needs of users.
In other words, the new versions of the two smart cars have actually not only reduced the price, but also reduced the configuration. Listening to Tong Xiangbei say this, many new users who are ready to start smart are not happy: reducing the allocation and reducing the price is actually equivalent to no price reduction, and there is no sincerity at all, so why buy it?
Not only that, but the price reduction also "backstabbed" many old users. According to the information of the car quality network, since the launch of the new version of the two cars by smart in mid-April, the number of complaints has increased sharply, and the vast majority of complaints are "disguised price reductions". Many old users complained about the same reason, to the effect that when they bought a car, smart didn't even want to give up a penny of the price, but soon after picking up the car, the new car launched by smart not only reduced the price by tens of thousands, but also gave new users some rights and interests for free.
If it is said that offending new users only affects temporary sales, then offending old users can be said to directly affect the foundation of smart - brand value. This is because the reason why these old users chose smart in the first place was actually to recognize its brand, but now, smart has broken the hearts of old users by cutting prices.
Even so, the Phantom #1 and Phantom #3 are small SUVs and compact SUVs respectively, and their price ranges of 15-200,000 yuan are still not cheap compared with domestic cars of the same level. For example, as a car of the same level as the Elf #1, the starting price of the BYD Yuan UP has dropped to less than 100,000 yuan. As a car of the same level as the Elf #3, the BYD Yuan Plus is priced at 11-147,800 yuan, and the price of the top configuration is even lower than the lowest configuration of the two smart cars.
As the saying goes, there is no car that can't be sold, only a price that can't be sold. After comparing the prices of smart cars in the same class in China, it seems that the sharp decline in sales of the former seems to be easy to understand. It's just that the reason for Smart's poor sales may not stop there.
Cutting prices is still useless, where does Smart go from here?
Since the launch of the refreshed versions of the two cars in April, smart's sales in May have indeed increased, with third-party platforms showing that smart retail sales in May were 3,327 units, compared to only 1,145 units, 726 units, 1,700 units and 1,718 units from January to April this year. In other words, the price reduction has indeed led to a significant increase in sales of smart's two models in a relative sense on a month-on-month basis.
Even so, smart's sales of 3,327 units in May this year were barely enough to meet the sales level of the same period last year. From January to May last year, its retail sales were 3,170, 3,616, 5,911, 4,390 and 2,624 respectively. For the most part, sales in May of this year weren't even as good as the average sales in those months of last year. We can't help but ask: if the price reduction still doesn't boost smart's sales, then where does it go from here?
In fact, the reason why the price reduction still can't boost smart's sales too much, on the one hand, is because it hasn't dropped enough, which we have explained above, and on the other hand, it may be related to the quality of smart. Many users who bought smart around them had previously revealed to the "Boom Party" that although there were no major problems with these two cars, there were many small problems, such as the appearance of the parts warping, abnormal noise, slow response of the car machine, and a relatively large discount on battery life, etc., and these problems could not be solved even if they were reflected with the manufacturer, so they could only make do with it as a means of transportation.
In short, for both Geely and Mercedes-Benz, if they want to make smart a place in other markets at home and abroad, rather than delisting, then they will have to show real sincerity in the future.
This sincerity includes two aspects: first, listen carefully to the needs and feedback of users, and truly create products that can meet the needs of users, rather than blindly lying on the past achievements and resting on their laurels; The second is to reduce the price and reduce the price to a truly competitive price, rather than holding on to the brand value, after all, the brand value is worth in the face of survival?