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Anyone shopping for a new car in China is in the right place at the right time. The world’s largest auto market is in the midst of a heated price war, and the situation is only intensifying.
In the first quarter, a total of 649 variants of passenger cars, or around 20% of all vehicles on the market, saw transaction price drops of more than 10,000 yuan ($1,500), data compiled by research provider China Auto Market show.
Back in February, that percentage was just 12% of all cars, and it was as low as 6% this time last year. As competition intensifies, both domestic and international automakers are aggressively cutting prices.
Some companies initiated reductions quickly on their own as they saw what was happening around them, while others have piggybacked off incentives offered by local governments as part of broader economic-stimulus packages.
In March, for example, government subsidies in Hubei province in central China, together with discounts from state-backed Dongfeng Motor Group Co, slashed the price of the Citroen C6 by more than 40%. Tesla Inc, which said it will build a large new battery factory in Shanghai, further cementing China’s place atop the global energy storage supply chain, arguably kicked all this off when it cut prices of its locally built models by 14% in early 2023.
But despite an initial lead regarding the degree of price cuts, the US automaker has now fallen behind in terms of who’s offering the steepest discounts — an indication of the extreme pressure affecting the entire industry, from carmakers through to dealerships.
Toyota Motor Corp’s bZ4X, an electric sports utility vehicle, has recorded the most significant sustained price drop this year in China, the data show. The model’s 400 kilometre-range Elite JOY version had a transaction price of 139,380 yuan in March, 30% down from 199,800 yuan in December.
German premium makers Audi and BMW are also offering generous discounts, particularly on their electric models.
Really, it’s a full-blown price war spanning gasoline to electric vehicles and ensnaring new-energy upstarts as much as it is legacy automakers.
Tesla’s shares plunged 6.1% earlier this month on concern that significant price cuts early this year have only yielded an incremental gain in vehicle sales.