Author | Chai Xuchen

Editor | Zhou Zhiyu

The former joint venture brother has stepped up once again with BYD.

Recently, in line with the 71st anniversary of the FAW Group, FAW-Volkswagen launched a mid-year promotion. The three entry-level models, Bora, Suteng, and Tanyue, were reduced to 0.0698 million, 0.0898 million, and 0.1398 million yuan. At the same time, they also prepared a zero down payment plan to increase their appeal and reduce the car purchase threshold to a minimum.

0.07 million can drive home a German magic car that used to cost 20,000 to 300,000 yuan. It was hard to imagine a few years ago. According to industry insiders, this is probably to counter BYD's siege of joint venture A-class oil trucks.

At the beginning of this year, BYD launched a “nuclear bomb” — the 0.0798 million yuan Qin Plus Honor Edition and Destroyer 05 to continue to expand its footprint in the compact sedan market and occupy the final sales volume of the joint venture tanker. From January to June, the two cars occupied the first and fifth place in the market segment with 0.241 million units and 0.097 million units, respectively.

Under the chaos, Bora “disappeared” from the top 10 list of the compact sedan market. The original success of 0.04 million units in a single month was no longer there, and total sales fell nearly 40% to 0.048 million units in the first six months of this year. Although Sagitar held the top four positions, sales fell 7.3% year on year, and did not return to the previous high monthly sales of 0.03 million+, with an average monthly sales of 0.016 million units in the first half of the year.

Compared to the sedan series, the SUV family's market performance is even weaker. In June, the nine SUVs under FAW-Volkswagen delivered a total of 0.0286 million units, less than the 0.041 million Tesla Model Y during the same period. However, they are the heroes that once brought FAW-Volkswagen to the altar.

The glory of FAW-Volkswagen also stopped in 2022. In that year, BYD ranked first among domestic car companies. Since then, the gap between the two has continued to widen. According to data from the Passenger Federation, in the retail list for the first six months of this year, FAW-Volkswagen ranked second with a score of 0.771 million, while BYD (1.388 million units) was 1.8 times that, a difference of nearly half.

FAW-Volkswagen, which is desperate to break through, introduced promotional policies several times this year, and all models participated in trade-in. Not only are there oil truck products, but the subsidy level for the pure electric ID family is also around 0.02 million yuan.

However, the stimulatory effect of price cuts is no longer obvious; it only keeps FAW-Volkswagen's monthly sales volume at the “top 7”. A few years ago, it was difficult to see the peak of monthly sales of 0.1 million units. And this is also a synopsis of the difficulties and challenges faced by joint venture brands during the industrial transformation period.

Two years ago, when VW China President and CEO Bred took office, he predicted that “the main competitor of the Volkswagen brand in China is no longer another joint venture car company, but BYD.” In fact, not only BYD, but now independent brands such as Geely and Changan are chasing after FAW-Volkswagen.

As new energy sources begin to replace fuel vehicles as the mainstream of the market, traditional joint ventures will also need to “fight back”.

Facing increasingly fierce competition, FAW-Volkswagen, as the boss of the joint venture brand, is determined to break the game, while also imitating the entire joint venture car company.

Two months ago, FAW-Volkswagen issued an internal notice called “Operation Breakout”. The article stated, “FAW-Volkswagen is in the final and only transformation window. Apart from being backed by the First World War, we have no choice but to die with all our heart.”

At a point of change where Yu Chengdong called out “fast fish eats slow fish,” FAW-Volkswagen is preparing for a major acceleration. Starting this year, it will accelerate the launch of electric and hybrid products and speed up the pace of exports of the Jetta brand. The company has also set an annual sales target of challenging 1.9 million-2 million units for the whole year, which means that compared to 1.91 million units last year, it is necessary to achieve a steady increase.

On July 9, FAW-Volkswagen upgraded its tram model, the Magotan, and updated the exterior design of its tram, equipped with new technologies such as L2 smart driving, and launched the slogan “Tongzhi in oil and electricity” to consolidate its dominant position in the top 3 B-class cars.

In the field of pure electricity, according to public information, the project to produce PPE platform products in Changchun is scheduled to be completed in December this year. This is a new energy production line planned for the Audi brand under FAW-Volkswagen, with an annual production capacity of 0.15 million units. The FAW-Audi Q6L e-tron is already on the verge of being the first PPE platform.

According to industry insiders, FAW-Volkswagen is trying to “improve our strengths and make up for our shortcomings” and reinvent a new star product that is both dynamic and profitable in order to revive morale.

However, this former car company brother still needs to speed up even more. Currently, BYD's fifth-generation DMi hybrid technology is about to be launched. The fuel consumption for 100 kilometers has reached 2.9 L, and the comprehensive range has surpassed the 2000 km mark. Next year Geely will quickly follow suit. The new forces are also manufacturing differentiation in terms of service, intelligence, energy supplementation, and market positioning, and are racing to the ground in the joint venture oil truck market.

To regain its former glory, FAW-Volkswagen must learn the strategies of its own brands and cross-border players such as Xiaomi and Huawei, “see tricks and tricks”, and quickly adapt to the rules of the new era. As FAW-Volkswagen enters the “year of uncertainty” in 2024, it also hopes to sprout new shoots.

Going back in history, over the first 30 years of entering China, FAW-Volkswagen relied on excellent product strength and strong brand appeal to establish an unshakable position. In the fuel era, FAW-Volkswagen has both the well-known Santana and the leading mid-range and high-end brand Audi.

Even in a deep-water zone of dramatic changes in the industry, leading joint venture brands such as FAW-Volkswagen are still accumulating huge potential, and if they can be fully utilized, it is not impossible to reverse the industry pattern once again. FAW-Volkswagen will still need some time to find a way to break the game and launch an onslaught. It is also expected to use this to take back the crown of its brother.