Title: Auto Industry Intensifies Price War in the Second Half as Sales Targets Remain Unmet
By Gong Mengze, Staff Reporter
In the first half of 2023, the auto industry witnessed a surge in sales, achieving a cumulative total of 13.239 million vehicles, marking a 9.8% year-on-year increase. However, due to the low sales target achievement rate, particularly among new energy auto companies, many car companies have begun resorting to price cuts and discounts to boost their sales during the second half of the year.
Starting in August, numerous car companies have announced price reductions on various models, including official discounts, new car discounts, and terminal profit sharing. These price cuts cover more than 20 models, ranging from 50,000 yuan to 300,000 yuan.
AITO Wenjie Automobile Authorized Experience Store in Beijing is among the many retailers offering discounts. Customers purchasing the Wenjie M5 can now enjoy a discount of 10,000 yuan, along with additional benefits such as optional fund rights and a Beijing brand redemption discount.
According to the China Automobile Dealers Association, the dealer inventory warning index rebounded to 57.8% in July, indicating a rise in sales pressure in the domestic auto market. As a result, 32.7% of dealers have raised their sales targets for the second half of the year, potentially triggering a new round of price wars.
The trend of price cuts in the auto industry has been evident since August, with SAIC Volkswagen leading the way by offering price reductions on nine SUV models. Other manufacturers, including Leap Motors, Chery New Energy, SAIC MG, Great Wall Motors’ Euler brand, and Nezha Automobile, have also announced significant price cuts on various models.
Zhang Xiuyang, Secretary-General of China Passenger Car Industry Alliance, believes that the price war during the second half of the year will be more intense than in the first half. Cui Dongshu, Secretary-General of the National Travel Federation, had previously highlighted the high probability of a price war in the second half of the year, given the intense competition in the industry.
To support the industry amid ongoing price wars, the China Association of Automobile Manufacturers initiated a “Letter of Commitment to Maintain a Fair Market Order in the Auto Industry,” signed by 16 mainstream auto companies. The association aims to standardize marketing activities and create a harmonious consumption environment.
The government has also introduced positive policies to boost auto demand. On July 31, the country officially issued the “Measures on Resuming and Expanding Consumption,” highlighting automobile consumption. Additionally, 13 ministries and commissions recently issued “Several Measures on Promoting Automobile Consumption.”
According to Xu Haidong, Deputy Chief Engineer of the China Association of Automobile Manufacturers, the good performance of new energy vehicles and automobile exports has stimulated market growth. Stable and predictable policies are necessary to ensure the industry’s smooth operation and achieve steady growth throughout the year.
In 2023, the China Association of Automobile Manufacturers aims to achieve a development goal of 27.6 million automobile sales, a 3% year-on-year increase. The industry remains hopeful that the positive growth seen in recent years, combined with effective consumption promotion policies, will continue to drive the industry forward.