Author | Wei Wei
Edit | Xi Xiaolin
Produced by | CNS
When you enter the word "price war" in the search box, you will find that not only car companies are fighting price wars, but also bubble tea shops are fighting price wars, coffee shops are fighting price wars, hot pot restaurants are fighting price wars, air conditioning manufacturers and so on are also fighting price wars.
From "170,000 BMW i3", to 9 pieces of 9 coffee, to 8 yuan pot bottom...... Behind the rounds of price cuts in these industries, it reflects the saturation of market supply and the downgrade of mass consumption. Therefore, too many car manufacturers, too many 4S stores, too many milk tea shops, and too many hot pot restaurants will have to fiercely compete for limited consumer spending. In the automobile market, whether to roll or not, how to roll, manufacturers quarrel and can't understand each other and reach a consensus, but the smoke of the price war has not dissipated.
By the end of July 2024, the latest case of the price war has been added - BYD Leopard Five Furious Drop of 50,000 yuan. Almost at the same time, NIO fired a rare shot, clearly opposing the practice of Li Auto releasing weekly sales, and moved out high-level documents to define the former's behavior as "low-level involution" and "vicious competition", and then Geely and Xiaopeng also followed suit and opposed it.
The Political Bureau of the Central Committee of the Communist Party of China held a meeting on July 30 to review the "Several Provisions on Rectifying Formalism and Reducing the Burden on the Grassroots", which mentioned that "it is necessary to strengthen industry self-discipline and prevent 'involution' vicious competition" Of course, earlier, there was a faction led by BMW to withdraw from the price war. China's auto market is already in turmoil, as if it has entered the Warring States period. In order to further understand the structure and trends of the automotive market, let's sort out the data on the volume of risks that is closer to the real performance of the market. This article focuses on the performance of the luxury car market in the first half of the year.
The traditional luxury car market is weakening, but the strong are always strong
First of all, let's take a look at the overall data of the auto market in the first half of the year From January to June this year, the number of domestic passenger cars insured was about 9.9085 million, a year-on-year increase of 3.6%.
In the luxury car market, BMW, Mercedes-Benz and Audi still firmly occupy the top three positions on the list. Looking at the whole list, Hongqi has quietly sat in the top position of the second echelon, and its sales are the sum of Lexus and Volvo, which are ranked fifth and sixth. Cadillac, Jaguar Land Rover, Lincoln and Smart are in seventh to tenth place. However, it is worth mentioning that the overall luxury car market trend has not outperformed the market. Among the top ten, only the pure import Lexus has grown against the trend, but behind the growth is that the tradition of "selling cars at a higher price" that was once strong for Lexus dealers no longer exists. In the first half of the year, the number of "thunder cars" without price increase exceeded 80,000, a year-on-year increase of more than 20%. In fact, in the past decade, the rankings and seats in the top 10 of the luxury car list have hardly changed, and the new faces are only Hongqi and smart, but under this unchanged appearance, the structure and outlook of luxury cars have been brewing big changes. Hongqi and smart can be on the list for no other reason, it is relying on new energy vehicles. Hongqi's cumulative sales from January to June 2024 were 157,000 units, an increase of 22.6% compared to the same period in 2023. Smart sold 12,000 units in the first half of this year, a decline of nearly 50% compared to last year, and there is a great suspense about whether it can retain its tenth position by the end of the year. Since the MINI has already released the all-electric MINI Cooper, deliveries will continue to be reflected in the data for the second half of the year. The two boutique cars that were once entangled in the fuel vehicle market will inevitably continue to fight in the era of new energy vehicles. Unlike Hongqi and smart that rely on new energy vehicles to be on the list, in the top three BBAs with stable structures, they are experiencing the strong impact of new energy vehicles. In the first half of the year, BMW insured 364,000 vehicles, down 5.4% year-on-year; Mercedes-Benz insured 350,000 vehicles, down 10% year-on-year; Audi maintained its growth, capping 329,000 units in the first half of the year. Not only the sales volume, but also the profits of the three giants are also affected. Take the latest financial data released by Mercedes-Benz Group as an example: in the first half of this year, the group's revenue was 72.616 billion euros, a year-on-year decrease of 4%; Adjusted EBIT was 7,647 million euros, down 28 percent year-on-year. net profit was 6.087 billion euros, down 20% year-on-year; Sales fell by 6% over the same period, with electric vehicle sales down 17%. Mercedes-Benz's revenue and profit both declined mainly due to the decline in the proportion of passenger car segment and electric vehicle sales. In particular, Mercedes-Benz's entry-level and core models face stiff competition in the Chinese market. Obviously, behind the fierce competition, it is mainly affected by the impact of domestic new energy vehicles on sales and price wars. BMW has not yet announced its financial results for the second quarter and the first half of the year, but it has already taken the initiative to make a big decision: to withdraw from the price war. According to the analysis of industry insiders, BMW's move will become a watershed in the price war in the auto market, and its follow-up impact will be far-reaching. But as others are worried, there is also great uncertainty about whether sales will be squeezed and affected after exiting the price war, and BMW's own market performance. Moreover, after BMW announced its withdrawal from the price war and the price increase against the trend, some BMW 4S stores were accused of "refusing to deliver the car", which also made many netizens complain: It turns out that these car dealers are still "ugly". The luxury car market has been hit by new energy vehicles, but they themselves are not not not embracing new energy, on the contrary, they are very positive. But from BBA's strategic planning, it can be seen that their blockbuster new energy vehicles are invariably concentrated in 2026, so from the second half of 2024 to the end of 2025, how can BMW, Mercedes-Benz and Audi find a balance between profitability and sales, and will the top three on the list that have been firmly occupied for a long time be broken by the impact of domestic brands? Anything is possible.
New luxury brands are growing rapidly
Unlike the cold atmosphere presented by the traditional luxury brand list, the sales list of new luxury brands, mainly local brands, can be described as gratifying. Among the top 10, only Tesla, the big brother on the list, and Denza, which ranked fifth, declined, while other brands showed large gains. Among them, Tesla, as one of the initiators of the price war in 2023, will also be impacted by the price war of domestic brands in the first half of 2024, and its market performance is slightly lacking in stamina, and its frequent "cost pricing" price adjustment model seems to have lost its former power, not only failed to rise sharply, but also had an impact on Tesla's own financial performance after multiple rounds of price adjustments: Tesla's total revenue in the second quarter was $25.5 billion, a year-on-year increase of 2%; Net profit was $1.478 billion, down 45% year-on-year.
However, in terms of absolute sales, Tesla is still far ahead, with a cumulative insurance volume of 280,000 units in the first half of the year, and the second place Li Auto is 194,000 units, and there is a gap of more than 80,000 units between the two. NIO, which ranks third, continues to perform strongly after entering 2024, with a total of 86,000 units insured in the first six months, a year-on-year increase of 52.4%. However, NIO's delivery performance is also inseparable from its preferential policies. The official price of NIO has not been officially promoted or lowered, but with the service and battery swap system that has been laid out for many years, NIO has enough room to adjust between the latter two. And at the sales terminal, NIO has performed more actively than before, for example, in June and July, the author received many calls from NIO sales staff, or invited to test drive, or asked about car purchase intentions, etc. In addition to Tesla and NIO, other new luxury brands backed by traditional car companies are also being swept up in the price war. However, in order to reduce the price and change the name, many car companies choose to achieve price reduction by releasing new models and giving substantial preferential measures. Especially in the first half of 2024, a word that comes up frequently is: limited-time discounts. Time-limited preferential policies of 10,000, 30,000 yuan or even more at every turn tease the minds of car buyers and stimulate the sales of the brand.
However, it should also be noted that the gap between the new luxury brands is very large, and the gap is even greater compared with the absolute sales volume of traditional luxury brands. The price war is mainly concentrated in the "weak" but urgently need to expand the market of new luxury brands, so it can be speculated that the price competition between them will continue to increase in the second half of the year, as analyzed above, which will also continue to have a further impact on traditional luxury brands.
Write at the end
After decades of rapid development, China's auto market is bound to usher in a day of reshaping. In particular, the luxury car market, after years of outperforming the market, will also begin to face a reshuffle after entering 2024. No matter what industry, in the era of market saturation and full competition, price war cannot be avoided, but the bottomless, "kill the chicken and take the egg" style "price war" will only be a lose-lose war without a winner. Looking forward to the second half of the year, the price war will continue, which will also accelerate the elimination process of the market, and the situation that there are dozens or hundreds of car brands in China's auto market in the past many years may be gone. The old giants are hanging up the war-free card, and new giants are being born in the flames of war.