Unconsciously, the price war in the Chinese car market has been ongoing for two years. This smokeless war not only tests the strength and endurance of major car companies, but also reshapes the competitive landscape of the entire industry. As a car executive once said, in this competitive red ocean, as long as the number of players is large enough, the phenomenon of "internal competition" in the industry will become increasingly fierce, until some players gradually withdraw from the stage due to the inability to bear the pressure.
The price war seems to have become a unique landscape in the car market, starting almost every year from January and continuing until the end of the year without interruption. In order to seize the "good start" of the new year, car companies have put in all their efforts, such as price wars, marketing wars, and technology wars, striving to seize the opportunity and win the favor of consumers in the new year.
This "good start" effect is no longer just a market strategy, but has become a standard action for many car companies to prove their strength and showcase their brand charm. In this long and arduous battle, every participant is doing their best, just to stand firm in this major reshuffle of the car market and embrace a more brutal but also full of opportunities in the future.
So much so that many people believe that this highly competitive and sustained "involution" state will become the new normal of the car market. During this period, all products and brands participating in market competition must possess strong "involution" adaptability and counterattack power, otherwise they will quickly lose their foothold in the fierce market competition and be ruthlessly eliminated.
Price war depends on top car companies
A few days ago, Cui Dongshu, Secretary General of the China Association of Automobile Manufacturers, pointed out in a post that as the winter price reduction trend gradually subsides, the automobile market is gradually returning to the normal track of promotion increment and healthy competition. This transformation undoubtedly brings a breath of relief to the entire automotive industry. After a period of intense price wars, the rational return of the market is particularly precious.
At the same time, the promotional subsidies for the national policy of scrapping and updating have been further strengthened, injecting new vitality into the car market. This measure not only promotes the replacement of old vehicles, but also effectively drives new car sales, making the market clearly showing signs of recovery. In this context, the pressure brought by the price war has relatively eased, and the car market at the end of the year has shown a sustained and strong trend, laying a solid foundation for the market development in the coming year.
However, earlier on, some analysts had raised concerns that the early introduction of relevant subsidy policies could overdraw future market demand. Against the backdrop of car companies increasing production capacity in order to seize policy dividends, the shadow of the "price war" seems to have not completely dissipated, but is lurking in a more covert form.
So much so that many people believe that this highly competitive and sustained "involution" state will become the new normal of the car market. During this period, all products and brands participating in market competition must possess strong "involution" adaptability and counterattack power, otherwise they will quickly lose their foothold in the fierce market competition and be ruthlessly eliminated.
Price war depends on top car companies
A few days ago, Cui Dongshu, Secretary General of the China Association of Automobile Manufacturers, pointed out in a post that as the winter price reduction trend gradually subsides, the automobile market is gradually returning to the normal track of promotion increment and healthy competition. This transformation undoubtedly brings a breath of relief to the entire automotive industry. After a period of intense price wars, the rational return of the market is particularly precious.
At the same time, the promotional subsidies for the national policy of scrapping and updating have been further strengthened, injecting new vitality into the car market. This measure not only promotes the replacement of old vehicles, but also effectively drives new car sales, making the market clearly showing signs of recovery. In this context, the pressure brought by the price war has relatively eased, and the car market at the end of the year has shown a sustained and strong trend, laying a solid foundation for the market development in the coming year.
However, earlier on, some analysts had raised concerns that the early introduction of relevant subsidy policies could overdraw future market demand. Against the backdrop of car companies increasing production capacity in order to seize policy dividends, the shadow of the "price war" seems to have not completely dissipated, but is lurking in a more covert form.
They predict that as 2025 approaches and the policy frenzy gradually recedes, a new round of "price wars" among car companies may erupt again in January 2025, becoming a challenge that the industry must face.
There are many rumors circulating in the terminal market, including at the dealer level, about policy adjustments. Among them, the most noteworthy is that policy measures such as trade in and replacement subsidies may face a decline in 2025. This news undoubtedly poured cold water on consumers who are planning to use policy discounts to buy cars, and also made car companies start to re-examine their market strategies.
Some car brands, in order to stabilize consumer confidence, have started mentioning replacement car owners who lock up orders before the end of the year. They have promised to provide differential compensation if national or local policies such as trade in and trade in (including scrapping) subsidies are cancelled or reduced when the car is picked up, in order to alleviate the impact of policy changes on consumers' purchasing decisions.
In this context, the price reduction strategies of automobile suppliers are particularly subtle. On the one hand, price reduction is an effective means to attract consumers and increase sales; On the other hand, excessive price reductions may trigger price wars and damage the overall profit margins of the industry. Therefore, for car companies, finding a balance between price reduction and maintaining profits has become an extremely challenging task.
From another perspective, assuming that car suppliers continue to choose price reductions, this will undoubtedly become one of the effective ways for car companies to reduce costs and increase efficiency. However, the chain reaction caused by price reduction cannot be ignored. Therefore, for the upcoming year of 2025, car companies need to scrutinize their market strategies more cautiously.
If top car companies choose to continue lowering prices, the price war will no longer be a simple multiple-choice question, but a cruel reality that all car companies cannot avoid and must face directly. For other car companies, following the price reduction seems to be the only option, otherwise in the price sensitive consumer market, it is easy to lose competitiveness and be marginalized.
However, price reduction is not an easy task, as it tests the cost control ability, product innovation ability, and flexibility of market strategy adjustment of car companies. How to attract consumers through price reduction while ensuring product quality and service, without harming the long-term interests of the enterprise, has become a question that every car company needs to ponder deeply.
Will competition become more intense next year?
For the automotive industry in 2024, the China Association of Automobile Manufacturers (CAAM) has set a challenging goal: to hit the milestone of 30 million vehicles in annual automobile production and sales. Data shows that as of the first 11 months of 2024, China's automobile manufacturing industry has delivered a good performance, with cumulative production and sales reaching 27.903 million and 27.94 million vehicles, respectively.
Based on this positive trend, the industry generally predicts that the annual automobile production and sales volume will remain stable above the milestone of 30 million vehicles. Of particular note is the impressive performance in the field of new energy vehicles, with total sales expected to approach 13 million units for the year, far exceeding the target set at the beginning of the year.
Behind this series of achievements, the strong promotion of the national "car trade in" policy and the precise implementation of local car replacement subsidies are indispensable. These real monetary policy incentives are like a shot in the arm, effectively activating the potential of the automotive consumer market, promoting the elimination and renewal of old vehicles, and injecting strong growth momentum into the automotive market.
Industry experts point out that policy support is the main driving force for the current growth of the automotive market. Without this assistance, the market size this year would be difficult to reach such a high level. Currently, several new car manufacturers have confidently released their preliminary sales forecast guidelines for 2025, demonstrating a positive outlook for the future market.
Xiaomi Auto entered the market with a predicted sales volume of 360000 units; NIO has set a target of 460000 vehicles; Xiaopeng Motors is expected to sell 350000 vehicles; Zero Run Motors demonstrates a strong desire for market share with a predicted sales volume of 500000 units; And Ideal Auto has set a grand goal of 700000 vehicles.
Traditional car companies are also not to be outdone. As a leader in new energy vehicles, BYD's sales forecast range for 2025 is between 4.4 million and 5.5 million units, almost occupying an important pole in the entire new energy vehicle market. Volkswagen plans to sell 1.5 million new energy vehicles in the Chinese market. At the same time, Dongfeng Motor and SAIC Motor Passenger Vehicle have set new energy sales targets of 1 million units each.
As the competition in the automotive market has become increasingly fierce in the past two years, the Chinese automotive market has experienced one round after another of brutal and intense elimination rounds. In this war without gunpowder, the competitive landscape within various types of new energy sub markets has gradually become clear. The top few winners have basically stabilized their leading position with strong technological strength, brand influence, and precise market positioning.
In the future, these new energy enterprises that are already firmly seated at the table will leverage their existing advantages and accumulation to further expand market boundaries, deepen brand influence, and continuously expand their market share. When the market increases, there must be a decrease. At that time, which brands will decline to the edge is full of unknowns and confusion.
Based on the "leapfrog" growth goals of some car companies mentioned above, it can be foreseen that the entire vehicle manufacturing industry will continue to face fierce competition in 2025. In this war without gunpowder, the only constant possibility is the continuous increase in the penetration rate of new energy, which will continue to put pressure on the sales of fuel vehicles. The entire automotive industry is accelerating its transformation towards new energy and intelligence.
Of course, we must be aware that if car companies rely solely on price wars to gain market share, the side effects of this short-term strategy will also follow closely. Although price wars can temporarily attract consumers and stimulate sales, in the long run, the profit margins of vehicle manufacturing companies will continue to decline, even approaching the breakeven point, posing a serious threat to the long-term development of the enterprise.
This issue is like a hidden time bomb, and its potential destructive power cannot be underestimated. It is hard to imagine how these companies, which have been severely damaged by price wars, will cope with sudden challenges and whether they can stand firm in the fierce market competition when the market environment undergoes a sudden change or consumer demand fundamentally shifts in the future.
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