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Owing to high levels of stock and low market sales, major car enterprises are on the path to lower prices, with the hope of achieving the goal of promoting growth in car sales. In recent days, after foreign branding, the brands of national cars, represented by beijing modern, jiang huai and chire, have been lowering the price of their domestic automobiles and lowering their prices。
In the current round of price wars initiated by the shanghai public, could the car companies achieve the desired results? Will this price war continue in the second half of the year
The price is down
In recent days, three more members of the automobile-priced army, modern beijing, jiang huai and chiri, have arrived. It is a matter of concern that the cars of jiangye and chire are autonomous brands, with very few autonomous brands in the previously low-priced fleet. According to chinese commercial journalists, beijing modern has been downgraded since 1 august for the top two suv models. Of this total, the price reduction for the total vehicle type of ix35 in 2015 was $20,000, and the maximum reduction for the total new success in 2015 was $30,000。
In fact, the drop in car prices began in april this year, when it was dominated by joint venture brands. On 6 april, the shanghai public announced the lowering of the official price of guidance for the sale of part of the car, which opened up the downfall (official price reduction) of the car company in the current round. Since then, shanghai's general general, a crowd of people, chang anfort and beijing modern have all been involved。
In august, china's autonomous brands, which were originally concentrated in markets below $100,000, also began to join the official fall. According to reports from the jiangyei automotive network, the kangyee automobile will lower the official sales prices under the flag and for a30, new and happy, and rae feng m2, at a cost of $1. 28 million, $13,000 and $17,000 respectively. Chire also announced a reduction of $8,600 in the price of the two vehicles under chire's flag from august to the end of the year, along with other preferential activities。
This was the first time that car prices had dropped to less than $100,000. Prior to this, lower prices in the automobile market were concentrated in over $100,000. The grand wall, for example, lowers the official selling prices of harvard h6, h2, and harvard h8, which are officially directed at $100,000 and more than $200,000。
On 7 august, the beijing automotive group announced that north giant x65 had announced a cash discount of up to $15,000, making it the only 80,000-grade 2. 0t suv. By doing so, north steam reaches markets below $100,000。
In beijing, the deputy general manager of the motor trade market in north tai chia, gyeong-kyung, it appears that the official price reduction is normal for a car company, but that the official drop in an autonomous brand is unusual. Because of foreign brands and joint ventures, there is a relatively small margin for domestic ownership。
Former vice president of changan motors, private gong, had stated that many of the autonomous brands had largely chosen not to follow up on the round of price wars spearheaded by the joint venture brand. Mostly because there is no follow-up。
This official price reduction has been exacerbated by the entry of vehicles under $100,000 from over $100,000 to less than $100,000. According to yang-yang: “as opposed to the model where the price of the joint-venture brand is mostly defunct or less well-sellered, the price of the autonomous brand is mainly of the dominant type. This is mainly because they want to increase their share of the market.” and on this basis achieve the scale of quantitative impact benefits
So, in the context of the lower car prices of jiangye and chire, would other autonomous brands also join the demotion? Other autonomous brands are likely to follow suit, as each brand has its own target customer market and has a certain share in the target customer market, and in order to keep its market share intact, autonomous brands may use price reductions to facilitate sales。
It's not cheap to drop down
For automobile businesses, the greatest purpose of official drops is to increase sales. But under the current system of car market prices, can official drops really contribute to higher sales
During a visit to the north china shipping village motor market in beijing (hereinafter referred to as “north china trading market”), journalists found that officials did have a certain appeal to consumers. A shanghai volkswagen salesman at the north china fair said, in an interview with a journalist from the chinese merchant newspaper, that since the announcement of the official price reduction, the number of visitors to the car had increased and sales were moving up. The data on fox search cars show that polo and twayan, the two most favoured vehicles in shanghai during the fall, sold 7. 45 million and 31,000, respectively, in the first half of the year, an increase of 16. 37 per cent and 71. 99 per cent, respectively, particularly in the context of other mini-surges and even declines in sales。
However, in the view of industry, the shanghai public is an isolated phenomenon and, for most automobile brands, the effects of official drops are not ideal. In the first half of the year, and in particular from april to june, soldiers indicated that, according to the analysis of the changan car, the lead in the price battle was not having the desired effect。
In recent days, reports issued by the chinese association of automobile circulation have shown an increase in the number of distributors' promotions and in the number of customers in july. According to its survey of national distributors, the share of distributors that have declined in the volume of collectors is decreasing, from 67 per cent in the previous month to 50. 7 per cent, and the increase has risen from 3. 8 per cent in the previous month to 12. 3 per cent, from 29. 2 per cent to 37 per cent。
But did you meet the expectations of the company? In the view of the company, which has already reduced prices, most brands do not actually meet their expectations and are not ideal, despite the fact that official drops have somewhat increased their sales.” because consumers are tired of this incentive to lower prices.”
In fact, the current price reduction at the end of our automobile market has become regular. Wang wing, assistant secretary-general of the chamber of commerce and industry of the all-china chamber of commerce and industry and director of industrial research, said in an interview with a journalist in the chinese newspaper, that the car manufacturer was now pushing the stock to the dealer, who, in order to finance the fast return cage, was only engaged in preferential activities through the terminal. This has made price reductions the norm in the automobile sales market。
In this context, the royal wing believes that the car manufacturer's price reduction is in fact a return to market terminal prices and is not a forward-looking price adjustment. As a result, distributors are not actually active in the company's downfall。
On the one hand, after the official drop, the distributor lowered the former margin of preference, so that the price that eventually allowed consumers to enjoy was not much different from that which had existed before the official drop. The distributor of the beijing modern 4s store at the north chinese trading market told the chinese newspaper correspondent: “more concessions are less. In the case of the ix35 smart type of modern price reduction in beijing, the margin of preference could have reached 40,000 before, but with 20,000 down, the margin was reduced to 20,000. In other words, the sales prices of this car in the final market do not differ significantly before and after the official drop。
Gaming indicates that this phenomenon does exist in the automobile market. “after the official fall, consumers did not actually enjoy much more preferences than before, nor did the final price.”
On the other hand, there is another consideration for distributors. The wang wing indicated that, following the official's fall, the dealer would lose the profit if the former stock vehicles were sold at the new price, which would result in the sale price being lower than the purchase price. Thus far, no compensation has been provided by the manufacturer for the losses incurred by the distributor as a result of the demotion. As a result, market prices have not changed significantly since the official drop。
Fall down! Fall down
The data show that our stock of cars remains high and that the soil that breeds the price-deficit still exists. According to the survey of early warning indicators of chinese automobile dealers' stock, published by the chinese association for the circulation of cars, the stock warning index was 53. 4 per cent in july 2015, although it was 11. 2 percentage points lower than last month, but the stock warning index remained above the alert line。
At the same time as the stock is high, the market remains volatile. It is stated that while specific data are not available, current consumer demand in the overall automobile sales market has not increased much in terms of market end sales。
“the whole car market is now like this, and the rest of the season hasn't gone anywhere, and the season hasn't gone anywhere,” yan-yang explains。
Against the backdrop of a volatile market, car companies, like the frog in the hot water boil, must do something to break through. In explaining the price reduction for its norther gentleman, northerfeng explained that the unprecedented concessions that had been made before the arrival of the golden nines and tens had demonstrated the norther gentlef’s commitment to the inevitable。
In a judgement on the market, liu zhifeng, deputy general manager of modern business in beijing, stated that the first half of the year could account for 47 per cent of the year, and the second half of the year would see a rebound, with 53 per cent of the year。
According to sales data published by various cars, the completion of the first half of the brands, such as east wind honda, a sedan, utility and modern beijing, is not satisfactory. This means that in the second half of the year, the marketing tasks of the car companies will be severe. Thus, in order to promote sales, companies will also use more market incentives。
How can sales growth be achieved? Prices are the most direct stimulus in terms of the level of stimulus to the market。
Earlier, the price monitoring centre of the national development and reform commission, which had forecast markets for the second half of the year, had indicated that car prices were expected to continue their steady medium-to-low movement in the second half of the year and that the decrease would be slightly greater than in the first half of the year。
The soldiers have even been predicting the price reduction for a longer time. In his view, the drop in car prices this year was only the beginning, and the future price battle might last three to five years. According to his calculations, the number of cars supplied by chinese vehicles this year is 35 million, but the market needs less than 25 million cars, leaving about 10 million surplus。
Against the backdrop of an overall automobile market with larger supply than demand, and a large stock of cars, next price battles among major automobile brands will be the norm。
The consumer observer is the chinese journal of commerce, which is produced by the ministry of information。
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