It is said that China's auto industry will be more volatile in 2024 than in 2023, and as soon as the Spring Festival holiday ended, BYD fired its first shot.
On February 19, BYD announced that the era of "electricity is lower than oil" is coming, and the listing price of the Qin plus Glory Edition is as low as 7980,000, which is 20,000 lower than the champion version a year ago.
Source: BYD's official website.
The shock wave of price reduction hit, and some domestic automakers reacted quickly.
Wuling Starlight 150km Advanced Edition price reduction 6000 to 9980,000, Nezha X400 Air listing guide price 9980,000, other versions drop 220,000; Changan Qiyuan A05 is limited to 7Sold from 890,000 yuan, Geely Emgrand L HIP Longteng version is listed on the market 8The sale starts at 980,000 yuan, and the entry price drops to about 20,000 yuan.
Joint venture car factories are also participating in the war, and Beijing Hyundai Elantra cut prices by 240,000, minimum 7The minimum sale is 580,000 yuan, and it also shouted the slogan "oil is stronger than electricity".
This shows that manufacturers have prepared for this kind of war.
Blackboard Jun remembers that at the beginning of 2023, Dongfeng Group took the lead in setting off a first-class war, and many car companies first waited and watched and then were forced to leave, but this time it was more calm.
The deeper problem is that there is an essential difference between the first wave of the ** war last year and the ** war after the festival this year.
Blackboard Jun believes that the ** discount initiated by Dongfeng comes from a passive to a greater extent, and this time BYD, the situation is completely different.
BYD has the initiative, the advantages of the industrial chain and sales, so that it can better control the gross profit, although the war is a double-edged sword, but if it can bear this price, it is more cost-effective, and at the same time, it can also get more strategic space and market in the subdivision.
In 2024, the automotive industry is destined to be bloody.
What is the strategic significance of the war?
How to understand this round of ** battle, instead of just watching the excitement?
Looking at the Chinese auto market in recent years, it is inseparable from the "two contentions": one is the battle between oil and electricity, and the other is the battle between independent brands and joint venture brands.
The reason why independent brands have been able to get rid of the situation that they have been unable to fight for many years is precisely because of the tuyere of trams.
Taking stock of the parties involved in the war in the past few days, BYD, Wuling, Changan, Nezha, and Geely all have a large scale in the tram market, and they all continue to make efforts in the entry market of the 100,000 range.
Source: Official posters of all parties.
The models that participated in the war, 890,000 starting from plug-in hybrid models, 10 110,000 were pure electric models, and there were no fuel vehicles participating in the war.
Beijing Hyundai, the only joint venture participating in the war, and the fuel car Elantra participating in the war, all seem a little "out of place".
It seems that it is still an "involution" war for China's own brands, but if you think about it carefully, this is actually a decisive battle for the joint venture.
Let's talk about "trivia": even in 2023, when it is in full defeat, the joint venture has not handed over the sales throne of the A-class sedan.
According to the data of the passenger association, the top three are Dongfeng Nissan's Sylphy, with 376109 units; SAIC Volkswagen's Lavida, 345879 units, and BYD's Qin Plus DM-i, 307,411 units.
That's right, even 9.The Qin plus Champion Edition starts from 980,000, and even the discount is superimposed to 8 at the end of the year980,000, in January, the sales list is still dominated by these two joint venture models.
In this price segment, the big brands of the joint venture, the long-term accumulation of model reputation, and the most important thing: although the configuration is weak, it can also be used, with a landing price as low as 80,000.
Now, BYD's Glory Edition is the first to tear open this ** guardrail.
7.980,000 plug-in hybrid models that do not require purchase tax, and they are also "price reductions and increases".
Source: Understand Chedi.
The addition of new color matching, intelligent power-on and off, and continuous voice dialogue make this model with high configuration, fuel economy, good power, and good reputation complete a comprehensive surpass of these two joint venture bridgeheads in terms of product strength.
Coupled with the other models participating in the war, the entry-level bridgehead, which is extremely important for the joint venture brand, may really be lost in 2024.
Why BYD?
Within a year, from the champion version to the glory version, it actually dropped by 20%**, and at the same time, the configuration was also increased, why can BYD fight such a terrible ** battle?
There are three main reasons:
First, BYD has strong vertical integration and whole industry chain capabilities.
Many modern car companies, especially joint venture car companies, choose to occupy the core of the upstream of the industrial chain, such as traditional fuel engines, brands, and designs, and hand over various parts to third parties to comfortably earn maximum profits.
BYD is not the same, after entering the automobile market in 2003, it chose the road of new energy vehicles, but at that time the industrial chain of electric vehicles was not perfect, and BYD's scale at that time could not convince the best business to provide special parts.
BYD had to choose to develop its own spare parts, including the core battery, motor, electronic control, etc., more than 20 years of research and development accumulation, especially after the first chain crisis affected by the epidemic in recent years, independently master the upstream and downstream, as the world's best vertically integrated car company, BYD instead showed the cost and advantage of mastering the research and development of core components and production capacity.
Source: BYD Weibo.
The second is the control of marginal costs by the scale effect.
BYD is now the world's largest new energy vehicle company by sales, with more than 3 million vehicles sold in 2023, and many models have annual sales of hundreds of thousands, just like the Qin Plus DM-i, which has exceeded 300,000 annual sales.
The integration of the upstream and downstream industrial chains, coupled with large-scale production, has a greater improvement in the reuse rate and yield of parts, and the cost of dilution to each part is also lower, which further improves BYD's cost control ability.
Third, there is the rapid price reduction of battery raw materials.
When the sales of new energy vehicles just took off, lithium carbonate, the raw material for batteries, soared because of the short supply, and in 2022, the first ton of lithium carbonate was once as high as 500,000 yuan.
However, with the global lithium carbonate production capacity climbing, the relationship between supply and demand has changed, and now it has fallen below 100,000 tons, and the lowest is only 80,000 tons.
The drop of up to 8 percent has greatly reduced the cost of the battery, and it has also made this ** battle as low as 8980,000 plug-in hybrid models Qin PLUS DM-i, as well as as as as as 10The 980,000 yuan EV Qin PLUS EV is possible.
The three-pronged approach is the reason why BYD can take the initiative to launch the first war, and it is also the reason why many independent brand car companies can have the confidence to participate in the war.
If you are interested, you can take a look at last year's Nihon Keizai Shimbun and UBS** Research Department's teardown report on BYD seals, and you can find a lot of answers.
Why raise a double-edged sword?
Although BYD has the ability and initiative to launch a war, the war is always a double-edged sword, why did Wang Chuanfu decisively show his sword at the beginning of the year?
According to the 2023 annual performance forecast released by BYD, the annual net profit is expected to be 290-31 billion yuan, while BYD's annual new car sales are 3.02 million units, that is to say, BYD's single car profit has come to about 10,000 yuan, which is far higher than the 3000 5000 yuan single car profit of many domestic brands, but only about 1 7 of Tesla.
Now, the successive listing of the Glory version has dropped by 120,000, even with the cost advantage mentioned above, it is still unknown how BYD's bicycle profits will change in 2024.
In addition, the ** war will also hurt the brand value, after all, it is easy to reduce prices, but it is difficult to increase prices, just like Xiaomi mobile phones, it took many years to slowly reverse the brand impression.
In addition, of course, there is also the problem of "** backstabbing" of old car owners, if you are not careful, it is easy to reduce the price of other brands, causing public relations crises such as "joint letters" of old car owners.
But Blackboard Jun believes that there is no problem with BYD's strategic thinking.
First, it is necessary to seize the window period for development.
The tuyere time is always limited, and now BYD has a very good vertically integrated industrial chain, and its financial situation is also relatively good, and it is in a relatively good state.
The investigation and suppression of Chinese trams in European and American countries have already shown signs of success, and European, American, Japanese and South Korean car companies have also begun to catch up. It seems to be the world's No. 1 new energy vehicle company, but in fact, the competitive pressure and threat have not weakened.
BYD is also continuing to recruit R&D and further technology fish ponds; Build shipbuilding factories around the world and accelerate the pace of exports; The domestic base camp also needs to further accelerate its development, and price reduction is the best sales promoter.
Source: BYD.
Second, BYD's brand matrix has achieved initial results.
Of course, price reductions will damage brand value, but BYD has built a brand matrix for different groups of people in advance.
For example, BYD's dynasty and marine system are developing a market of less than 300,000 yuan, DENZA covers the middle class and business market of more than 300,000 yuan, Equation Leopard covers the mid-to-high-end off-road and personalized market, and Yangwang is the master of brand strength, covering a million-level market.
Nowadays, the Denza D9, Formula Leopard Leopard 5, Yangwang U8, etc. have achieved good sales results, and the brand matrix has achieved initial results, which can be used as a new engine for BYD to obtain higher profits per car, while the BYD brand can continue to fight the best battle to ensure the basic sales volume.
Of course, BYD took the initiative to launch the first war, and there were active reasons and passive factors.
According to the National Business Daily, there are market rumors that BYD's sales target for 2024 is 4.5 million units, compared with 3 million units in 2023, an increase of up to 50%.
Where did this 1.5 million increase come from? From the estimated 40% new energy penetration rate in the Chinese market, from the overseas market, from the grabbing of the joint venture brand cake, especially from the entry ballast stone of the volume!
Instead of waiting for someone else to initiate, it is better to take the initiative yourself.