Recently, the Ministry of Ecology and Environment, the Ministry of Industry and Information Technology, and other departments jointly announced that starting from July 1, 2023, the 6th stage of the National VI Emission Standard will be fully implemented nationwide, and the production, import, and sale of vehicles that do not meet the 6th stage of the National VI Emission Standard will be prohibited. The era of National VI B is coming soon. Compared to the previous switch between the fourth and fifth national standards, many people seem to be looking forward to a wave of price cuts in the car market, just like in the past, to catch the bottom and pick up loopholes.

　　01 The previous "National Five Year Price Reduction Tide"

　　The National VI Standards were first released at the end of 2016. In terms of technical standards, the emission standards of State VI are much stricter than those of State V. The emission standards for carbon monoxide, non-methane hydrocarbons, nitrogen oxides, fine particulate matter, and other pollutants have been reduced by nearly half, even exceeding the previously benchmark European standards. Therefore, it is also known as the most stringent emission standard in history.

　　Such high standards, coupled with the fact that 2017 has not been long since the implementation of the National Five Standards, have resulted in two stages of the National Six Standards: National Six A and National Six B, which were implemented on July 1, 2020 and July 1, 2023, respectively. This is equivalent to giving car companies a 3-year buffer transition period before the official implementation of this year. However, in 2019, due to environmental pressure, many provinces and cities in China chose to implement the National VI standard in advance, with a population exceeding half of the country at that time, including Beijing, Tianjin, Hebei, Shandong, Guangzhou, Shenzhen, Hainan, and others. They also restricted the registration of new cars with the National V standard after July 1st. This has led to a huge pressure on dealers to clear inventory before July 1st, resulting in unprecedented discounts for the backlog of National Five models.

　　From domestic brands to luxury brands, almost all brands have increased their discounts to some extent, including the daily strong Volkswagen, Toyota, BMW, etc. Among them, the most memorable should be Cadillac. At the end of their career, the ATS-L discount exceeded 100000 yuan, and even the bare car discount was less than 160000 yuan, which made it popular again. Guagua eaters are also fond of discussing who has a lower discount and a cheaper price, so that in the later stages, the Cadillac ATS-L and XT5 of the National Fifth Five were once again hard to find, moving from one extreme to the other, just like the price reduction subsidy of the Citroen C5 this year.

　　The 2019 Beijing Hong Kong Macao Auto Show happened to be held in June, just before July 1st. The booth staff has added many sales consultants, and in the face of car show audiences, they often talk about the National Five Year discount instead of introducing new models. They can offer discounts ranging from thousands to tens of thousands on site. The Beijing Hong Kong Macao Auto Show, which already has a certain regional sales nature, has directly turned into a national fifth model exhibition.

　　Overall, this wave of inventory clearance has reduced the final terminal price by 20% -25%, essentially an additional 20% discount, which is already lower than the profit margin of distributors. The clearance sale allowed some consumers to get more cost-effective prices, while 4S stores could only endure the pain of losing money.

　　In addition to the most direct impact on distributors, price reductions have also had a certain negative impact on various brands, especially for independent brands who have worked hard to establish their brand image, and have returned to a state of low-priced promotion overnight. At the same time, due to the inertia in the anchoring heart, the price of the National VI model without significant discounts appears too high for consumers, which has to some extent affected the car market in the first few months of the second half of 2019. Many people hope to wait and see again, waiting for greater discounts from the National VI model.

　　The wind blew for a long time on June 6th, 2002

　　After the transition from National Day 5 to National Day 6 a, the era of comprehensive National Day 6 b will soon be ushered in on July 1 of this year.

　　Faced with the imminent implementation of the strictest emission standards in history, there are still many people calling for a delay in implementation and providing more buffer time, but in the end, the authorities did not extend it. However, for most car companies, they are already prepared.

　　The national six standards, which are divided into two stages, were introduced as early as 2016, giving car companies enough buffer time. With the experience of switching from the previous National Fifth to National Sixth, despite the need to adjust components such as the engine and three-way catalytic converter, which incurs additional costs and time, many car companies have already prepared new cars that meet the National Sixth B standard. For example, domestic brands such as SAIC, GAC, and Chang'an are among the first to apply for the National Sixth B model.

　　Nowadays, most mainstream brands have adjusted their products to meet the standards of National VI B. That is to say, domestic brands have already started selling new cars from China VI B for a long time. So far, the proportion of light vehicles from China VI B has exceeded 95%, and the market share of China VI B vehicles has exceeded 90%. The phenomenon of dealers having a large backlog of inventory no longer exists when the country switched from country 5 to country 6 last time.

　　At the same time, under the National VI B standard, car companies are also required to conduct RDE actual road exhaust emission testing, rather than testing in the laboratory previously. However, the announcement from relevant departments also pointed out that for some light vehicle models such as the "Monitoring Only" and other national VI B models reported in the actual driving pollutant emission test (i.e. RDE test), a six-month sales transition period will be granted, allowing sales until December 31, 2023. This is equivalent to providing further buffering.

　　After our communication with mainstream brand dealers such as Toyota, Honda, Volkswagen, Volvo, and Geely, it has indeed increased slightly since May, but overall, the discount rate has not significantly increased. Part of the reason is that some stores already have mid year promotions to stimulate performance, and there is also a slight impact on models such as the Honda Accord, which faces model upgrades. Only some models with later updates will have a certain demand for inventory clearance. For example, the 2023 Toyota Leling, which was just launched in March, was able to be equipped with the fifth generation THS II hybrid system, resulting in a greater discount for the 2022 model.

　　So, unlike the early transition from National Day 5 to National Day 6 in 2019, the upcoming upgrade of National Day 6 B was announced a few years ago, and because National Day 6 A provided a more effective transition for car companies, they also started adjusting to National Day 6 B. It can be said that the car market has gradually completed the transition to National Day 6 B. Car companies and dealers are already prepared, and without the pressure to clear inventory, the terminal discounts will naturally not be as large.

　　03 Car companies can't afford to lower prices anymore

　　As a result, there was no significant price reduction expected by some this time, and the terminal prices of most new cars have remained relatively stable recently. There has been less heated discussion about the implementation of National VI B, and even less so than the news of Beijing's 2024 ban on illegal electric tricycles on the road.

　　Many people still remember the recent wave of price cuts at the beginning of the year. A single spark can start a prairie fire, gradually allowing multiple brands and regions to follow up from the initial C5, and eventually evolving into a price reduction trend that affects the entire market. Many people also feel that "price cuts" will become a major feature of the car market this year, especially when the implementation of National VI B is about to come again.

　　However, as mentioned earlier, although the policy has set the date for National Day 6 B on July 1st, everyone has already completed the transition to National Day 6 B in advance, and the rest is basically ready. Moreover, electric vehicles now have a penetration rate of about a quarter, especially in the booming new car market, which has to some extent weakened the impact of China VI B.

　　Although from the perspective of consumers, price reductions always take advantage, for the market that has not yet fully recovered and the fiercely competitive car companies, it can only be regarded as drinking poison to quench thirst.

　　In the past two years, car companies have had a difficult time. Although price cuts can have a certain stimulating effect on sales, in the long run, blindly lowering prices will inevitably have a negative impact on brand image, leaving consumers with the impression of not preserving value and weak brand. Once the discount intensity decreases or higher priced products are launched later, consumers will experience "price reduction sequelae" and hold onto the coin to wait, which will have a greater impact on sales and lead to a vicious cycle in the long run.

　　At the beginning of the year, a wave of cars were indeed sold, but it can only be considered as forced to take a deep dive, especially for domestic brands that have broken through from the bottom up and joint venture brands that survive in the cracks. Building consumer confidence in the brand has always been a heavy and long way to go task. After all, car companies still have costs to deal with, and it's not always possible for heroic losses to occur, otherwise it's just a matter of closing down. Perhaps many people's desire to copy the bottom and pick up loopholes this time has been dashed, but the smooth transition to National VI B has reduced the entire car market from one more setback.