In the second half of the year, the "price war" in the car market may reopen, with multiple car companies announcing price reductions for dealers, sales, and price wars

In the first half of 2023, the automotive industry accelerated its internal competition in the reshuffle, achieving a cumulative sales volume of 13.239 million vehicles in the first six months, a year-on-year increase of 9.8%. However, due to the generally low sales target achievement rate of domestic automotive companies, especially new energy vehicle companies, in the first half of the year, they have started their momentum work early in the second half of the year.

Since August, multiple car companies have joined the price reduction army through various forms such as official discounts, new car discounts, and terminal discounts, covering over 20 models with prices ranging from 50000 to 300000 yuan.

On August 7th, a reporter from Securities Daily visited the AITO Wenjie Automotive Authorized Experience Store located in Blue Harbor, Chaoyang District, Beijing. As the earliest to follow up on Tesla's price reduction at the beginning of the year, the Wenjie M5 is currently eligible for a first sale equity of 10000 yuan in optional equipment funds, a 5000 yuan Beijing license plate exchange discount, and subsidies. The optional equipment given varies depending on the vehicle model. "In addition to price discounts, the equity category mainly focuses on upgrading wheel rims and seat configurations," the salesperson at the store told reporters.

In addition, the reporter learned from the China Association of Automobile Dealers that after experiencing three consecutive months of decline, the inventory warning index of domestic dealers rebounded to 57.8% in July. At the same time, against the backdrop of continuous decline in transaction prices, 32.7% of dealers have raised their sales targets for the second half of the year. This means that the sales pressure in the domestic automobile market has intensified, and a new round of "price war" may restart.

Multiple car companies announce price reductions

The "price war" in the second half of the year may become more intense

In August, SAIC Volkswagen launched the first shot of price reduction, announcing a price reduction for 9 SUV models under SAIC Volkswagen from August 1st to August 31st. Among them, the highest comprehensive discount for Touareg and Touareg X reached 60000 yuan, while the highest comprehensive discount for Touareg L plug-in hybrid was 55000 yuan.

On the same day, Zero Run, a new force in domestic car manufacturing, simultaneously launched a price reduction campaign called "Double C at the door, Zero Run at the summer price". Zero Run Motors announced price reductions for some of its C-series models, including two C11 models and three C01 models, with the highest reduction of 20000 yuan for the C01 model.

In fact, this is the second official price reduction within the year since Zero Run announced the price reduction in March this year. "People believe that the central integrated electronic and electrical architecture is only suitable for products priced at over 300000 yuan. However, Zero Run can popularize such an architecture to popular products." Zhou Ying, General Manager of Zero Run Automobile's Marketing Department, stated in an interview with Securities Daily that "technological equality" is one of the greatest significance of Zero Run's car manufacturing for ordinary consumers.

Subsequently, Chery New Energy launched an official event, where users can enjoy different cash discounts for purchasing Chery New Energy's three models: the Little Ant, the Boundless Pro, and QQ Ice Cream, with a maximum of 10000 yuan. At the same time, SAIC MG MG has also launched limited time discounts on three popular models: MG5 Scorpio, third-generation MG6PRO, and MGONE, with a maximum discount of 26000 yuan per bike.

Under pressure, the Euler brand under Great Wall Motors has recently launched a limited time discount, with several models experiencing significant price reductions, up to a cash discount of 30000 yuan, including the Euler Lightning Cat, Euler Good Cat, Euler Good Cat GT Mulan Edition, and Euler Ballet Cat; In terms of Nezha Auto, it recently announced that the price of its 2022 Nezha S "Qixi" will be reduced by up to 49000 yuan from August 5, 2023, and at the same time, it will enjoy a financial discount or replacement subsidy of 8000 yuan.

"At the beginning of the year, Tesla was the first to lower its prices, triggering other car companies to follow suit. By March, Hubei's government enterprise joint subsidy triggered a nationwide promotion, and then the 'oil and electricity competition' for user groups. In fact, the 'price war' has not really stopped. In the view of Zhang Xiuyang, Secretary General of the China Passenger Car Industry Alliance, the 'price war' in the car market in the second half of the year is even more intense than in the first half.".

In fact, there is already a consensus on the speculation of continuous price reduction competition among automotive companies in the second half of the year. Previously, Cui Dongshu, Secretary General of the All China Association of Automobile Manufacturers, stated in an institutional survey that "there is a high probability of a 'price war' in the second half of the year." Cui also specifically mentioned that the market competition among various brands in the plug-in hybrid field will be more intense.

Frequent policy benefits

Continuous recovery of automotive demand

Previously, every time the domestic car market experienced a "price war" and a wave of price reductions, it would have a significant impact on the overall revenue and profit of the car market that year, disrupting the future development rhythm of the car market, and thus bringing some negative impacts that are not conducive to the development of the industry.

Based on this, in order to create a good market atmosphere, the China Association of Automobile Manufacturers has initiated the "Commitment Letter for Maintaining Fair Market Order in the Automobile Industry" signed in collaboration with 16 mainstream automobile companies such as Dongfeng, SAIC, and Tesla, requiring automobile companies to abide by industry rules and regulations, regulate marketing activities, and aim to maintain a good competitive order in the automobile market and jointly create a harmonious consumption environment.

At the policy level, on July 31 this year, the government officially introduced the "Measures for Restoring and Expanding Consumption", with a focus on automobile consumption. On July 21st, the National Development and Reform Commission, the Ministry of Commerce and other thirteen ministries also issued the "Several Measures to Promote Automobile Consumption".

In Cui Dongshu's view, consumer demand is still insufficient, the industry is still facing significant pressure, and there are still many challenges in enterprise operation. It is necessary to maintain policy stability and predictability to help the industry operate smoothly.

In 2023, the China Association of Automobile Manufacturers (CAAM) proposed a development goal of achieving a sales volume of 27.6 million vehicles and a year-on-year growth of 3%. It is understood that whether the domestic car market can continue its growth performance on the basis of two consecutive years of positive growth has attracted market attention.

"The good performance of new energy vehicles and automobile exports has effectively driven market growth." Xu Haidong, Deputy Chief Engineer of the China Association of Automobile Manufacturers, said that with the continuous manifestation of the effect of automobile consumption promotion policies, the consumption potential of the automobile market will be further released, which will help promote stable growth of the industry throughout the year.