be+attract+to

BEIJING, January 25 (TMTPost) -- To attract consumers during the Spring Festival, the Chinese New Year holidays, the  automakers in China once again rev up price war. Mercedes-Benz, BMW, Audi (BBA) stand out for their incredible price reduction.

According to TMTPost, the discount for 13 NEVs on sale of Mercedes-Benz is generally more than 100,000 yuan ($xxx ). BMW offers a discount of more than 150,000 yuan for its pure electric models. For Audi, the maximum discount for a certain single model is 260,000 yuan.

The three brands offered substantial discounts primarily because of their unsatisfying performance in the new energy vehicle market.  In 2023, the sales of NEVs for Mercedes-Benz, BMW, and Audi in the Chinese market were 32,823 units, 100,177 units, and 32,370 units, respectively.

In fact, even brands performing well in the NEV market have reduced prices to various degrees to fuel consumption before the Spring Festival.

According to TMTPost, over 18 brands have launched limited-time discounts before the holidays season, accounting for nearly half of all electric vehicle brands in the market. The 18 brands include NIO, whose policy used to be "no price cuts", Li Auto that rarely reduced prices and Tesla that had often lowered prices.  

These brands employ various discount measures, including cash discounts as well as complex discounts involving  insurance subsidies, trade-in subsidies, and more.

These promotions are not exclusive to NEVs. Traditional fuel vehicles are also experiencing a drop in prices.

However, unlike NEV brands that primarily adopt a direct retail model, fuel vehicle brands relying on dealer models advertise comprehensive discounts in terms of thousands of yuan. Meanwhile, the discounts officially released by car manufacturers are generally less significant than those provided by dealerships.

Although the price reduction policies will end by the end of January or before the arrival of the Spring Festival which falls February 9, according to the automakers, TMTPost suggests that consumers who delay their car purchases might even enjoy more substantial discounts. The wait will pay off mainly because of the following three main factors.

Firstly, the cost of battery, the most significant component of electric vehicles, continues to decline. In the past year, battery costs have nearly halved and the price is expected to decline this year. Consequently, the overall price of electric vehicles will follow suit.

Secondly, a large inventory will continue to drive down prices for various models. According to a survey og China Automobile Dealers Association (CADA), 23.2% of dealers had completion rates below 70% of their annual targets. Therefore, dealerships will inevitably lower prices to attract customers.

Lastly, intensifying price wars will contribute to a continuous decline in car prices. Lower prices are the most effective weapon for many brands to gain more market share in the intense competition.

In 2023, only four car manufacturers achieved their annual sales targets: BYD, Geely, Li Auto, and Lantu. Some car manufacturers even achieved less than 30% of their annual targets.

However, this has not diminished the ambitions of car manufacturers in 2024. According to the TMTPost, Li Auto aims to challenge an 800,000-unit sales target in 2024, a 113% year-on-year increase. The most aggressive is Aito, which aims to challenge a 600,000-unit sales target in 2024, a 538% increase from 2023.

Behind these ambitious sales targets is the increasing involution. With the introduction of various models, the discounts in 2024 may reach a new high.

(This article was first published on the TMTPost. Author: Wang Ruihao, Editor: Zhang Min)

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