Source: Securities firm Chinese author: Chen Xi
The car company epic grade price reduction is coming!
Recently, Hubei Province launched the "strongest car subsidy in history". The highest subsidy for Dongfeng brands reached 90,000 yuan, "go to Hubei to grab a car!" For a time, it has become the mantra of car dealers and car buyers everywhere.
Subsequently, Dongfeng "bargain" triggered the butterfly effect, according to incomplete statistics, so far, including Mercedes-Benz, BMW, Audi, Buick, BYD and so on, more than 30 car brands have participated in the price war.
The epic price reduction of the car circle also spread to the Hong Kong stock market. As of 1:30 in the afternoon, Hong Kong automobile stocks fell sharply across the board.$BYD COMPANY (01211.HK)$Drop by more than 8%$GAC GROUP (02238.HK)$、$GREATWALL MOTOR (02333.HK)$Drop by more than 5%$GEELY AUTO (00175.HK)$、$NIO-SW (09866.HK)$Drop by nearly 5%$LI AUTO-W (02015.HK)$Down by more than 4%$LEAPMOTOR (09863.HK)$、$XPENG-W (09868.HK)$It's down more than 3%.
Meanwhile, Musk, CEO of Tesla, Inc., said recently that Tesla, Inc. has a clear plan to deliver a small car that costs only half as much as the Model 3 sedan. It is estimated that Tesla, Inc. 's new car may be around $20, 000. This may lead the tram industry to restructure the price system again.
More than 30 brands start a price war.
Recently, a group of posters about "the strongest car purchase discount season in the history of Hubei" went viral. Popular models of several joint venture brands, such as Dongfeng Peugeot, Dongfeng Citroen, Dongfeng Nissan and Dongfeng Fengshen, announced department-wide price cuts and promotions. Dongfeng Citroen C6, with a guide price of 211900 yuan, plummeted 90, 000 yuan to 121900 yuan after various subsidies, igniting consumers' enthusiasm.
According to Wilson, as of March 8, Dongfeng Honda's average daily sales were three times that of 2022, Dongfeng passenger cars grew by more than 180%, and DPCA's daily orders increased by 900%. In addition, according to Wilson's research on dealers, most Hubei dealers, including Dongfeng Honda and Dongfeng Nissan, have exceeded 50 batches of customers, with individual stores peaking at 200 batches, dozens of times the usual level.
Since then, a number of car companies have also launched subsidy activities, price war is imminent.
China FAW has launched a campaign called "Qihui Jilin-100 million yuan limited time subsidy for people", with a total subsidy of 150 million yuan and a maximum subsidy of 37000 yuan for bicycles, Nanfang Daily reported. Dealers everywhere are also following. Jining Dongfeng Peugeot models can enjoy 30000 yuan in government subsidies and 75000 yuan in corporate subsidies. SAIC GM Buick announced that as of March 31, many of its models are eligible for subsidies. Hubei consumers can enjoy government-enterprise subsidies up to 70, 000 yuan.
Many brand dealerships in Guangzhou are also robbing consumers. Guangzhou Automobile Honda Haoying, Accord discount 20, 000-30, 000 yuan, FAW-Volkswagen launched any brand replacement tour, can enjoy 16000 yuan replacement support, Guangzhou Automobile Toyota Hanlanda landing 308800 yuan, another 5000 yuan purchase gift during the pre-sale period. The highest discount for SAIC Audi A7L is 38000 yuan, some Mercedes-Benz models are reduced by as much as 120000 yuan, and FAW Audi A6L is reduced by 90, 000 yuan.
Ford Electric Horse (Mustang Mach-E), a brand of pure electricity owned by Ford, announced on March 8 that it would clear the inventory of all models on sale and reduce the price by 40, 000 yuan, thepaper.cn reported. The special offer will last until April 30, and the price of the special car ranges from 209900 yuan to 329900 yuan.
According to the Financial Associated Press, it was learned from a number of BMW 4S stores on March 8 that BMW recently launched a big promotion and discounts, with its pure electric model BMW i3 falling by more than 100000 yuan. Take BMW i3 eDrive 35L as an example, its official guiding price is 353900 yuan, and the price of some 4S stores is 248000 yuan after discount.
BYD announced a price reduction and promotion of some models: a maximum deduction of 88 yuan and 8888 yuan. BYD official Weibo Corp said that the two main models of BYD Ocean Network will carry out special time-limited marketing activities from March 10 to March 31, 2023: song PLUS can enjoy 88 yuan deduction of 6888 yuan for car purchase; seals can enjoy 88 yuan deduction of 8888 yuan for car purchase.
According to incomplete statistics, so far, more than 30 car brands have participated in this price war, with the highest discount exceeding 100000 yuan. Some are official activities of the brand, some are promotions by regional dealers, some are direct price reduction, and some are indirect forms such as discount, insurance subsidy, financial discount, gift package and so on. Although SAIC Audi's preferential activities are only for internal employees, the quota for employees to buy cars has been transferred on the second-hand platform.
Musk revealed that the cost of Tesla, Inc. 's next generation new car has been halved.
In addition, Tesla, Inc. may also become a "catfish" that stirs up the entire industry.
On March 7, local time, Elon Musk, CEO of Tesla, Inc., said at a meeting with Morgan Stanley that Tesla, Inc. had a clear plan to deliver a small car that costs only half as much as the Model 3 sedan.
According to Tesla, Inc. 's US official website, the basic version of the Model 3 sedan currently sells for $42990. According to Musk, the cost of Tesla, Inc. 's next generation of small cars will fall to about $20, 000.
Samuel Garcia, governor of the Mexican state of Nuevo Leon, has said Tesla, Inc. is expected to start producing electric cars in Mexico next year and is close to getting final permission to start construction at the state's scheduled site.
According to Garcia, Tesla, Inc. will invest US $10 billion in the Mexican superfactory in stages. Tesla, Inc. chose Nuevo Leon, near the Texas border as the hub of Mexico's industrial cluster, because of its low costs, abundant labour and key component suppliers.
Musk also pointed out at the conference that the next generation of small cars will run almost entirely in automatic mode. Musk said during Battery Day in 2020 that he would build a small fully automatic electric car worth $25000 based on the Model 3 model within three years. Then, as the price of the Model 3 falls, the price of the unseen small electric car is expected to fall further. Some domestic industry insiders believe that the price of the car in the Chinese market may be around 150000 yuan.
On January 6 this year, Tesla, Inc. lowered the price of his products in China, giving some models the lowest price since entering China. After the price adjustment, Tesla, Inc. 's orders increased significantly. Tesla, Inc. 's wholesale sales in China were 74402 in February and 66051 in January, with a combined wholesale sales of more than 140000 in two months, according to the Federation.
Release policy gift packages in many places
At the government level, Hubei Province joined forces with a number of car companies to introduce government-enterprise car purchase subsidies. Now, this consumption boom has spread to all parts of the country. Dozens of provinces and cities, including Shanghai, Zhejiang, Henan, Sichuan, Heilongjiang, Shanxi, Yunnan, Hainan and Guizhou, have followed suit to introduce relevant policies to promote car consumption.
Henan extended the car purchase subsidy policy until the end of March 2023, giving consumers a subsidy of 5% of the purchase price of newly purchased cars in the province, 60 million yuan of automobile consumption subsidy in Tianjin, and 200 million yuan of car consumption vouchers in Shandong.
Yan Jinghui, a member of the expert committee of the China Circulation Association, believes that whether it is government subsidies or increased incentives for car companies and dealers, the ultimate goal is to promote automobile consumption. "giving high discounts can stimulate the market in the short term." He said.
It is worth noting that from July 1 this year, "National 6B", which is known as the most stringent emission standard, will also be formally implemented. This means that car companies that have previously made the transition to the "national six A" emission standard models must step up inventory clearance by July 1, and price discount is one of the most effective means. Cui Dongshu, secretary-general of the joint meeting of passenger car market information, said that this round of promotion is also for enterprises to clean up inventory for the replacement of national six emission standard models.
Retail sales in the passenger car market reached 1.39 million in February 2023, up 10.4 per cent from a year earlier and 7.5 per cent month-on-month, according to the Federation of passengers. Retail sales totaled 2.679 million vehicles from January to February, down 19.8% from the same period last year.
As one of the national pillar industries, automobile plays a more and more important role in boosting domestic demand and consumption, stabilizing industry and economic development. Behind the overall car price reduction, it is the urgent need to boost the automobile market pressure, the inventory index continues to rise, car companies have to compete for customers at low prices to stimulate the desire of car consumption.
According to the China Automobile Circulation Association, the inventory early warning index of Chinese car dealers in February was 58.1%, up 2% from the same period last year. The survey showed that 80.2% of dealers believed that February sales fell short of expectations, inventory pressure was greater, and capital flow was poor. due to fierce market competition, many car companies cut prices and the operating conditions of dealers declined, which is also an important factor in car price reduction.
Bo Wenxi, chief economist of IPG China, said in an interview with a Chinese reporter from a brokerage that there has been a wave of price cuts for new energy vehicles, with car companies led by Tesla, Inc. cutting prices one after another, which means intensified competition and a life-and-death battle for fuel vehicles. There is no choice but to switch to new energy vehicles quickly or sharply cut prices to meet the challenge.
Soochow Securities Research report said that the automobile demand recovery curve will enter the data verification stage, requiring three core variables to resonate one after another. 1) the recovery curve of consumer confidence after the epidemic; 2) the cost decline curve driven by Tesla, Inc. 's price reduction; 3) the intensive listing time of a new round of high-quality new car supply. The best time window for fundamental resonance is in the first three quarters of 2023.
Edit / lambor