BYD sparked a war

Wall Street Sights

2024-06-28 22:47Wall Street News Official Account

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01 BYD adopts a low-price strategy in the new energy vehicle market, which has caused competition chaos in the industry and survival anxiety of car companies.

02 Anxious car company bigwigs expressed their dissatisfaction with BYD's title of "King of Volumes" in various public occasions, calling for healthy and healthy competition.

03However, BYD insisted on cost control and rapid product iteration to maintain market share and competitiveness.

04At the same time, China's new energy vehicle companies are accelerating their overseas layout, but they need to remain rational in the competition to avoid vicious price wars.

05Experts predict that the market share of Chinese auto brands will increase to 80% or more around 2030, and the rest is king.

Technical support is provided by Tencent Hybrid Model

Author: Yu Yan

Editor: Zhou Zhiyu

The tight strings are about to break.

BYD has pulled down the prices of mass-market models, especially in the 100,000 yuan market, where sales are the largest, and is committed to breaking down the floor price. In February, BYD first passed the Glory version and hit "electricity is lower than oil", and at that time, the market of about 100,000 was reduced in price for many models.

At the end of May, BYD brought 99,800 yuan from Qin L and seal 06 into the market, compared with the cost performance of these two, the competitiveness of other competing products in the industry was eclipsed, and it could only be another round of price reductions.

The car companies that were "forced" by BYD to cut prices and make no money were quite dissatisfied and rose up. At the forums in June, the industry bigwigs started with "anti-volume", pointing at BYD.

Behind the heated discussion among the bigwigs is the collective survival anxiety of car companies under the extreme involution of the new energy automobile industry.

Today's new energy vehicle penetration rate is more than half, and even fuel vehicles are about to become "non-mainstream". This once blue ocean has become a red ocean, and there has been a lot of competition chaos in the process.

As new energy vehicles become the representative of new quality productivity and gradually go abroad, new energy vehicles also need to grow from the barbaric growth of the past few years to standardization, and become the representative of China's intelligent manufacturing.

For the car circle, how to roll down and where to grow is indeed a topic that car companies need to discuss together.

anxiety

In the past month, car company bigwigs have appeared in the "reverse roll", opening the prelude to this debate.

At the Chongqing Automobile Forum in early June, Zhu Huarong, chairman of Changan, Zeng Qinghong, chairman of GAC, and Li Shufu, chairman of Geely, all expressed their dissatisfaction with the involution of the automotive industry.

Li Shufu bluntly said that the result of endless involution, simple and crude price war, is to cut corners, counterfeit and sell, and non-compliant disorderly competition.

Subsequently, large and small press conferences and other public occasions, both openly and secretly, pointed the finger at BYD. Yu Chengdong, chairman of Huawei's intelligent vehicle solution BU, publicly called BYD the "king of volumes" at a forum in June.

This controversy has reached a climax with the launch of the new Haval H6 on June 19. At the press conference, Li Ruifeng, CGO of Great Wall Motors, once again pointed to BYD, "There is no problem with the volume, but it must be a healthy volume, a benign volume, and a bottom-line volume." The bottom line is to bring long-term value to users. If you blindly roll up, the price will be lower than the cost, even if you are dressed in the cloak of technology, the low-price, low-quality business essence will not change. ”

Behind this, BYD is constantly adjusting prices, intending to grasp its own right to speak in the mainstream market, and also involve other car companies in this price war.

The haze of the price war at the beginning of the year has not yet dissipated, and BYD released the fifth-generation DM technology on May 28. In the evening, the new models equipped with fifth-generation hybrid technology, Qin L DM-i and Seal 06 DM-i, were also launched at the same time, and these two cars took the cost performance to another extreme.

In a live broadcast, Li Yunfei, general manager of BYD's public relations department, said in a bit of Versailles that Qin L and Seal 06 have a lot of orders, and after thinking about it, they still don't release sales data for the time being, for fear of causing industry shocks.

The reality is that the strong offensive of these two cars, and the competing models can only be sold at further price reductions.

In particular, joint venture cars are the most injured. Toyota Corolla models have a limited-time discount of 43,000 yuan, and the starting price after the discount is 79,800 yuan; although Camry and Fenglander are not direct competitors compared with Qin L, and the price is higher, they have launched a discount of more than 30,000 yuan this month, and Highlander has a limited-time discount of about 60,000 yuan.

Zeng Qinghong couldn't sit still, he "reversed" and advocated "the same rights of oil and electricity" at the Chongqing Automobile Forum. In the first five months of this year, GAC Toyota and GAC Honda's sales fell by 24.3% and 27.26%, respectively.

The opponents who have been surpassed by BYD have also had a long-standing grudge with BYD. Geely was once an independent brother before BYD, and was surpassed by BYD in 2022. After BYD released its fifth-generation DM technology, Geely had questioned the unscientific results of its tests. On the Great Wall side, Great Wall has been responsible for sales of the Haval brand for many years, but after BYD's Song family entered the game, Great Wall was unable to maintain its position as the top seller in the SUV market.

The industry's "accusation" of BYD mainly points to its "price is lower than cost". BYD's extreme cost control ability under the combination of vertical integration and scale effect makes its ability to control prices more flexible.

In addition, BYD's model remodelling is also very fast. A person close to BYD Chairman Wang Chuanfu said that Wang Chuanfu asked internally that all BYD models will launch a facelifted model every six months to continue to maintain popularity in the market. Such a speed also makes the industry very anxious, after all, in today's environment, without attention, there may be no sales.

This kind of strength has made other car companies passively swept in. If you can't catch up with BYD, you can make less money in the short term, but in the long run, it will disappear if you don't make money.

Broken rolls

The change of new energy has stirred up the automobile market, and everyone hopes to overtake in corners and re-evaluate seniority.

New entrants have brought new rules of the game, the marketing logic of the Internet has entered the car circle, the dimension of the volume has become more, the volume cost, the volume technology has to roll the marketing, and the marketing methods have also been upgraded.

At the end of March this year, after Xiaomi SU7 was listed, it quickly became the new top stream, and several live broadcasts of Lei Jun, chairman of Xiaomi, added fuel to the fire.

Even the bosses of car companies have walked into the live broadcast room, or test drive the new car intelligent driving, or evaluate the battery life. Zhu Huarong and Li Shufu, Wei Jianjun, chairman of Great Wall Motors, and Yin Tongyue, chairman of Chery Holdings, became the "four old men" in the live broadcast of goods in the automobile industry, and Yin Tongyue also bluntly said that he was forced into the live broadcast room by Lei Jun and Yu Chengdong.

One of the most realistic situations is that if you don't join this competition, many companies will disappear in the process of moving towards the endgame of the industry.

Gong Min, head of automotive industry research at UBS China, told Wall Street that the concentration of the automotive industry will gradually increase, and some marginal car companies can also be seen exiting. It is expected that the market share of Chinese brands in China's auto market will increase from 57% in 2023 to 63% this year, and 80% or more by around 2030.

In terms of the number of companies, the future will be dominated by the leftovers. He Xiaopeng, chairman of Xpeng Motors, once said that by 2030, there will be no more than 8 car companies that can still survive.

Last year, Weimar was the first to fall, and at the beginning of this year, Gaohe left the market in disgrace. Recently, many car companies have laid off employees and closed factories. From the mass market to the luxury market, price reductions to embrace sales have been the theme of recent times.

For a long time in the future, the atmosphere of involution anxiety in the car rim will be difficult to dissipate. Last year, BYD became the first Chinese car company to rank among the world's top 10, and it will have to work extra hard to maintain its position.

It's just that with the development of the industry so far, what is a valuable volume has become a common proposition that the whole industry needs to think about.

The situation in the car circle today is very similar to the development of Japanese automobiles a few years ago.

In the face of Japan's sluggish consumption environment, Japanese cars were also fighting for price at the beginning, but then they also entered the stage of tapping market segment demand, developing more cost-effective mini cars, and also developing MPVs that are conducive to family travel, and many models have become classics. During that period, the diversification of automotive products increased dramatically.

In this process, Japanese car companies took the lead in promoting the lean production model, which is to use the attitude of excellence and scientific methods to control and manage the design and development, manufacturing, parts procurement and other aspects of automobiles, so as to achieve a balance in production costs, reliability, stability, delivery speed and other aspects.

China's new energy vehicles also need to take advantage of today's opportunities to develop upward.

Yu Chengdong also said that Hongmeng Zhixing does not roll the price, but the value, aiming at the luxury market, and now several cars have good sales.

In addition, China's new energy vehicle companies are also accelerating their overseas layout.

Taking the Southeast Asian market as an example, at present, Great Wall, Geely, BYD, Aion and other brands have begun to sell cars in Southeast Asia, among which BYD, Nezha, etc., are also building factories in the local area, driving many battery manufacturers to go overseas together, and the supply chain is becoming more and more mature.

But when it comes to going to sea, you have to be extra cautious. For example, Wei Jianjun and other bigwigs in the car circle mentioned that in terms of cars going overseas, new energy vehicles should not repeat the mistakes of motorcycles in Southeast Asia, and they should avoid vicious price wars and involution competition. Yin Tongyue also called on Chinese car companies to remain rational, pay attention to brand image and long-term development, and short-term success does not mean long-term success.

It's going to be a long process. Car companies need to have enough profits to support their progress, and they must face changes in the industry with a flexible attitude. This is a test for any player, but in this process, it is also necessary to find a way to break the game and let the industry get out of the disorderly involution; It is necessary to have enough respect for the industry, respect the law, and keep the bottom line, so as not to collapse the building.