The Luxury Car Market Returns to Rationality: BBA Exits Price War, Domestic Luxury Brands Seize Opportunities

The Luxury Car Market Returns to Rationality: BBA Exits Price War, Domestic Luxury Brands Seize OpportunitiesAfter an intense price war, the domestic luxury car market is undergoing a new adjustment. BMW took the lead in announcing its withdrawal from the price war and raised prices for several models

The Luxury Car Market Returns to Rationality: BBA Exits Price War, Domestic Luxury Brands Seize Opportunities

After an intense price war, the domestic luxury car market is undergoing a new adjustment. BMW took the lead in announcing its withdrawal from the price war and raised prices for several models. Mercedes-Benz and Audi followed suit, adjusting their pricing strategies. This shift signifies that luxury car brands are beginning to focus on business quality and market stability, no longer relying on price wars to stimulate sales.

BMW Leads the Exit: Reducing Volume to Maintain Prices, Returning to Rationality

According to multiple media reports, BMW was the first to announce its withdrawal from the price war, raising prices across its entire model lineup. For example, the starting price of BMW's electric i3 model has risen to over 200,000 yuan, an increase of about 20,000 yuan compared to the "180,000 yuan for an i3" during the price war period. BMW China stated that it will focus on the quality of its business in the Chinese market in the second half of the year, supporting dealers to build a solid foundation and work together on long-term development. Sources reveal that BMW China will reduce sales volume to stabilize prices starting from July, alleviating pressure on dealership operations. This indicates that BMW has recognized the drawbacks of price wars and is no longer pursuing short-term sales but instead looking to the long-term, prioritizing brand value and sustainable development.

Mercedes-Benz and Audi Follow Suit: Prices Return to Rationality, Market Competition Intensifies

Although Mercedes-Benz has not yet officially released a price hike notice, multiple sales representatives have indicated that prices are expected to rise. Audi has also disclosed that there have been slight price increases for its main selling models, with potential for further adjustments in the future. This signifies that Mercedes-Benz and Audi have joined the ranks of exiting the price war, starting to prioritize brand value and profitability.

The Ineffectiveness of Price Wars: Sales Not Increased, Brand Value Damaged

It's worth noting that BMW's cumulative sales in China fell by 4% year-on-year in the first half of this year, indicating that the price reduction strategy was ineffective. Mercedes-Benz and Audi also faced declining sales, with year-on-year decreases of 6% and 4%, respectively, in the first half of the year. Price wars did not lead to the expected sales growth but instead diluted brand appeal and negatively impacted dealer profitability. The latest financial report from luxury car dealer Guang Hui Automobile reveals a 11.49% year-on-year decline in revenue and an 86.61% year-on-year drop in net profit attributable to the parent company in the first quarter of this year, clearly demonstrating the downsides of price wars.

Ultra-Luxury Brands Follow Suit: Limited Price Reductions, Market Competition Grows

The previous price war in the domestic luxury car market also affected ultra-luxury brands like Bentley, Maserati, and Porsche, which joined the price reduction efforts to counteract declining sales. However, while the price reductions for ultra-luxury brands seemed substantial, the actual reductions were often around 10% relative to their high original prices and frequently accompanied by optional discounts and other terms. This suggests that ultra-luxury brands also realize that excessive price wars can damage brand image and are therefore exercising restraint in their price reductions while focusing on maintaining brand value.

Market Trends: Diversified Consumer Demands, Intelligence and Cost-Effectiveness Are Crucial

Industry experts point out that the luxury car market faces unprecedented challenges, with consumers' car purchasing needs becoming increasingly diverse and requiring a higher level of intelligence and cost-effectiveness. Traditional luxury brands need to keep up with market trends, accelerate product and technological innovation, and enhance product cost-effectiveness to maintain a leading position in the intense market competition.

Opportunities for Domestic Luxury Brands: Seize Market Transformation Opportunities, Promote Brand Value Orientation

With BBA and other luxury brands withdrawing from the price war, the domestic luxury car market is likely to experience a new competitive landscape. Domestic luxury brands like Li Auto, AITO, NIO, and Zeekr are expected to leverage this opportunity to achieve better market performance and further drive the transition of China's automotive market from brand orientation to value orientation. Domestic luxury brands have more flexible operational models, faster product iteration speeds, and products that cater more closely to the needs of Chinese consumers. After the price war subsides, they can focus more on product innovation and brand building, seize market transformation opportunities, and gain a larger market share.

Summary: Returning to Rationality, Value Orientation

The luxury car market is undergoing a significant transformation, where price wars are no longer the primary competitive strategy. Brand value, product innovation, and user experience are becoming the new battlegrounds. Domestic luxury brands have new development opportunities and need to seize the moment, continuously improve their product strength and brand power to remain undefeated in future market competition.

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