Aim2D: real time, 24/7 #ChinaBusinessMarketing, Tech and Social Media News Portal of The Bicaverse based in sunny Shunyi, North east Beijing. Tuesdays we look at business, marketing, tech or social news in and around China. Friday is image gallery where we examine a place, topic or subject giving you greater insight, background to life in China, and of course, your Chinese consumer. If hard, practical, realistic China consumer marketing support is what you need, do drop into our sister site: Unegager. Finally, in a sign of the times, we can assure you that our content is 100% loving created and hand crafted by a fellow human. No AI chatter bots here.
Car sales and prices have been in the news a bit this year in China. Some struggling brands, some cutting costs. Today we quickly background the situation as we see it.
A few years back now China’s gvt introduced subsidies for the purchase of EV’s or NEV’s. ( Electric vehicles / New Energy Vehicles)
Whilst this certainly created awareness and boosted sales, it also created space for opportunists. Ie, those backyard, made in a tin shed with dubious bits to claim gvt subsides. This consequently spawned a plethora of various weirdly branded EV’s on the Chinese market.
In a way though, this was good as it gave creative designers and engineers the chance to fabricate a working model and test it in the market. Some, Nio and Xpeng, for example, succeeded. Many others fell by the way side, merged or were absorbed. The end result was a huge uplift in China’s EV sector. Emerging stronger, more competitive. Consumer’s EV choice was no longer a TESLA or a TESLA.
Curiously, as Chinese makers turned the focus to EV’s, many of the international brands continued to push their ICE (internal combustion engine) models. Aim2D discussed this here:
Of course, all good things must come to an end and slowly, bit by bit, China began cutting back the incentives. This increased the competition which, already bloodthirsty and vicious, became even more cut throat, kick starting another round of failures and mergers.
2022 also saw more foreign EV brands on the Chinese auto market. Although, probably fair to say, domestic models still “owned” the turf. Competition in China was really between local marques and TESLA. Meantime, Chinese brands, notably BYD, Xpeng and Nio were slicing themselves a nice healthy wedge of the European EV market cake.
End of 2022 saw the end of subsidies. 2023 dawned with sales suddenly dropping. One of the first to react was TESLA, who had, over the past 3 or 4 years been one of the leading price cutting brands. Each time gvt “tweaked” the subsidies, TESLA ” tweaked” prices. Generally, in these cases, TESLA was cutting to maintain a margin with local brands, who, carried on carrying on. In other words, most EV price cuts in China were led by and restricted to TESLA models.
However, February 2023 saw many Chinese makers also reaching for the Stanley knife, offering generous sales incentives to boost demand after posting dismal delivery results for January.
Following a bleak mid winter (January) sales, TESLA kicked off another round of price cuts. Local and internationals brands, such as VW followed suite. Our friends at TECHNOTE have a neat little graphic showing the percentage crash for some Chinese brands as well as detailed figures on sales per brand.
TechNode has more on that below:
Sales of major Chinese EV makers reported double-digit declines in January as demand slows
MORE background: Local Chinese authorities unveil stimulus measures to spur EV sales
Although initiated by TESLA, allegedly in response to an end of subsidy cooling, an EV market “war” broke out, soon spreading to involve ICE models. Well, wars do have a nasty habit of spilling over, don’t they? It is possible that the ICE rebates and discounts, mostly on European brands, were driven by prior lack lustre sales at the hands of EV. Perhaps ICE makers saw an opportunity to dump there soon to be obsolete models and pitched to a segent that might be in the market for a new vehicle, but now rethinking the EV option on price.
Indeed, some NEV makers may have had the same thought as fear began to emerge that rather than spur sales, discounts might simply push potential buyers even further away from purchasing. Preferring to sit on the bench and see just how far prices will fall. So, after a hectic and confused February, March has seen some brands walking back or re focusing their promotion efforts.
Nio and Li Auto electric vehicle makers are looking to protect their superior brand images and achieve profitable growth despite concerns of a slowdown in sales in the short run, according to industry observers.
TechNode
As part of their promotional marketing many Chinese NEV brands are now looking at assisted financing options, extended payment systems, or including hitherto optional extras as part of a “package.”
How this will play out in the long run is open to debate, perhaps it may take time for China’s motoring consumers to come to terms with the new reality. It will also likely put the pressure back on foreign auto makers who risk being stuck with showrooms full of unwanted ICE models.
For a greater, indepth look at the situation as it stands today, this article from Jill Shen is an excellent read:
Aim2D China Business: News 
Leave a Reply