After North and South Volkswagen jointly reduced prices, the market remained calm. However, it was already raining over the towers. The large-scale price cuts in the auto market are not far behind. In recent days, price cuts have once again become the most noticeable news in the industry. The rumors of the latest price cuts are related to Guangzhou Honda. On June 28th, the “Jinghua Times†reported that the Guangzhou Honda Accord sedan had different rates of discount in some markets in Beijing. On the 29th, Guangzhou Honda denied the news. Guangzhou Honda said that the price cuts in some markets have nothing to do with Guangzhou Honda. Guangzhou Honda will not cut prices. However, no matter how the manufacturer makes a gesture of denying price reduction, it is convinced that the good day for raising a car is a thing of the past. The auto market has entered a trough in more than two years. The price cuts of the manufacturers are still not enough. On June 16th, FAW-Volkswagen and Shanghai Volkswagen jointly reduced their prices. Then, Dongfeng Citroen also lowered its prices. The price cuts in the dark have been wave after wave, but it has not attracted many consumers to the store. Information from various sources shows that after a number of manufacturers cut prices, their stores are still cold and sad. In fact, it is consumers who express their opinions that the price cuts have not reached the psychological expectations. The behavior of the two VW joint ventures is the best example. The price cuts of FAW-Volkswagen and Shanghai Volkswagen have been widely criticized - loud thunder and little rain. In fact, before the price cuts between the two manufacturers, dealers all over the country already had preferential prices. Therefore, after the price cuts, the market seems to be stunned. On one hand, it is the first time in the past two decades that Volkswagen’s two joint ventures in China have jointly cut their prices. This is a major event for the two companies. On the other hand, there are no splashes on the market. Big disappointment. There is only one explanation—that price cuts are not yet in place. The manufacturers are now crying and telling people that in fact, they don’t make much money, and car profits are not so high. After this price reduction, they will not fall again for a long time. But consumers still do not buy it, they are still waiting to see. The experience of many years tells them that car manufacturers always vowed not to cut prices on the first day, but on the second day they also offered "consumer benefits" a full range of discounts. In fact, manufacturers still have room to cut prices. We believe that in addition to the economical cars, there are still room for lower prices for other mid-size cars as well as mid- to high-end cars. Regarding this point, it can be clearly seen that there are public reports that manufacturers can earn tens of millions of yuan in production of tens of thousands of vehicles each year. In other words, the current price has not yet bottomed out, and consumers still have room for expectations. Small manufacturers face the fate of the decline in the manufacturers continue to cut prices in addition to moving consumers will also be bound to open a different kind of flower --- raise the threshold of the automotive industry, some small manufacturers may be out ahead. In the past two years, the market concentration of the 10 major automobile manufacturers in China has not been increasing, but they are declining. This shows that more and more companies are entering this industry. If major manufacturers continue to cut prices, they still rely on the brand and scale to survive. At the same time, due to the richness of the mainstream manufacturers' product lines, the East is not as bright as the West. But this will force many small manufacturers, especially many manufacturers that produce a single model, into trouble. After North and South Volkswagen joined hands to cut prices, the market remained calm. However, it was already raining over the towers. The large-scale price cuts in the auto market are not far behind. If prices are lowered again, they will no longer be as simple as temptation. All major manufacturers will calculate their own scale and cost, and they will spur the market. The scale and cost of major manufacturers are unmatched by other small vendors. Therefore, they will not be able to bear the price pressure brought by all major manufacturers and eventually exit the market. We hope that this situation will come earlier because it will not only benefit consumers, but also help the healthy development of the market. This is a real market competition. At the same time, the Central Government has painstakingly increased the threshold of the automotive industry and protected large companies for many years. Because, once the price cuts to the various capitals that do not have high profits, they naturally no longer willing to enter this business. In addition to lowering prices, there are other possible means. In addition to continuing to reduce prices, manufacturers should also have other means to save the market. For example, reviving personal car consumer credit business. One of the figures that shocked the industry was that the personal personal car loans in China had a bad debt of 100 billion yuan. It is this 100 billion bad debts that has driven the booming car consumer credit for two years into a hell. Since the beginning of this year, banks have continuously raised the threshold for personal auto loans. Insurance companies have also withdrawn and no longer provide related insurance services. This has caused the number of cars sold through consumer credits to plummet, which is less than a quarter of last year. In the past two years, through the blowout of the auto market, it has released a large number of consumer powers that have a one-time payment capability and are willing to buy a car. Next, the auto market will enter a steady growth period. A lot of new purchasing power is willing to buy cars through consumer credit. However, due to the lack of credit systems for individual automobile consumer credits in China, banks are left with a lingering fear and do not dare to undertake, resulting in a drastic contraction in the sales of various manufacturers. In this context, there are vendors actively involved in the banking business to provide credit support for sales services. Beijing Hyundai and CITIC Industrial Bank reached an agreement to provide credit support to dealers, thus supporting the modern opening of the sales market in the loan sector. Shenzhen Development Bank also said that it will cooperate with Volvo Trucks to provide personal car finance services for the brand cars. BMW Brilliance and China Merchants Bank cooperated to provide credit services. In fact, this move is obviously a manufacturer's own credit guarantee to promote personal consumer credit. For banks, this is undoubtedly a good thing compared to the risks associated with the absence of a personal credit system. The outlook is not that bad. Although there are many downturns now, the outlook for the auto market is not so bad. It is expected that in the second half of the year, the auto market will rebound under the stimulation of various forces. In general, the power to pull the economy is troika—investment, consumption, and exports. Looking at the current situation of economic operation, stimulating consumption in the second half of the year should be an important means to ensure stable economic growth. The macro-control measures made by the central government in March and April will quickly take effect in May and June. Figures show that from January to February, fixed asset investment increased by 53% year-on-year, compared with 43.5% in March, 34.7% in April and 18.3% in May. From January to March, new urban projects across the country increased by 31% year-on-year, 5.9% in April, and 15.7% in May. These figures show that the trend of excessive growth in investment has been contained. This round of economic growth is driven by investment, and investment slowdown will inevitably slow down economic growth. At the same time, the export surplus in May was basically unchanged from the $2.3 billion in the same period of last year. The net exports in May had little effect on the economy. For consumption, although the total retail sales of consumer goods in May increased by 17.8% from the same period of last year. However, taking into account the fact that the SARS epidemic last year was a relatively small base, the consumption in May remained basically stable. In the second half of the year, under the circumstances that investment continues to be contained and exports do not stimulate the economy, stimulating effective demand is expected to become an important means of maintaining a healthy and stable growth of the economy. This will undoubtedly be a good thing for car manufacturers and consumers. Perhaps, in addition to lowering prices, people can also look forward to better individual consumer car credits and a potentially improved consumer environment. (Liyuan) Editor of this site Source: Southern Weekend
Car price cuts are not yet in place. Larger price cuts are not far off
After North and South Volkswagen jointly reduced prices, the market remained calm. However, it was already raining over the towers. The large-scale price cuts in the auto market are not far behind. In recent days, price cuts have once again become the most noticeable news in the industry. The rumors of the latest price cuts are related to Guangzhou Honda. On June 28th, the “Jinghua Times†reported that the Guangzhou Honda Accord sedan had different rates of discount in some markets in Beijing. On the 29th, Guangzhou Honda denied the news. Guangzhou Honda said that the price cuts in some markets have nothing to do with Guangzhou Honda. Guangzhou Honda will not cut prices. However, no matter how the manufacturer makes a gesture of denying price reduction, it is convinced that the good day for raising a car is a thing of the past. The auto market has entered a trough in more than two years. The price cuts of the manufacturers are still not enough. On June 16th, FAW-Volkswagen and Shanghai Volkswagen jointly reduced their prices. Then, Dongfeng Citroen also lowered its prices. The price cuts in the dark have been wave after wave, but it has not attracted many consumers to the store. Information from various sources shows that after a number of manufacturers cut prices, their stores are still cold and sad. In fact, it is consumers who express their opinions that the price cuts have not reached the psychological expectations. The behavior of the two VW joint ventures is the best example. The price cuts of FAW-Volkswagen and Shanghai Volkswagen have been widely criticized - loud thunder and little rain. In fact, before the price cuts between the two manufacturers, dealers all over the country already had preferential prices. Therefore, after the price cuts, the market seems to be stunned. On one hand, it is the first time in the past two decades that Volkswagen’s two joint ventures in China have jointly cut their prices. This is a major event for the two companies. On the other hand, there are no splashes on the market. Big disappointment. There is only one explanation—that price cuts are not yet in place. The manufacturers are now crying and telling people that in fact, they don’t make much money, and car profits are not so high. After this price reduction, they will not fall again for a long time. But consumers still do not buy it, they are still waiting to see. The experience of many years tells them that car manufacturers always vowed not to cut prices on the first day, but on the second day they also offered "consumer benefits" a full range of discounts. In fact, manufacturers still have room to cut prices. We believe that in addition to the economical cars, there are still room for lower prices for other mid-size cars as well as mid- to high-end cars. Regarding this point, it can be clearly seen that there are public reports that manufacturers can earn tens of millions of yuan in production of tens of thousands of vehicles each year. In other words, the current price has not yet bottomed out, and consumers still have room for expectations. Small manufacturers face the fate of the decline in the manufacturers continue to cut prices in addition to moving consumers will also be bound to open a different kind of flower --- raise the threshold of the automotive industry, some small manufacturers may be out ahead. In the past two years, the market concentration of the 10 major automobile manufacturers in China has not been increasing, but they are declining. This shows that more and more companies are entering this industry. If major manufacturers continue to cut prices, they still rely on the brand and scale to survive. At the same time, due to the richness of the mainstream manufacturers' product lines, the East is not as bright as the West. But this will force many small manufacturers, especially many manufacturers that produce a single model, into trouble. After North and South Volkswagen joined hands to cut prices, the market remained calm. However, it was already raining over the towers. The large-scale price cuts in the auto market are not far behind. If prices are lowered again, they will no longer be as simple as temptation. All major manufacturers will calculate their own scale and cost, and they will spur the market. The scale and cost of major manufacturers are unmatched by other small vendors. Therefore, they will not be able to bear the price pressure brought by all major manufacturers and eventually exit the market. We hope that this situation will come earlier because it will not only benefit consumers, but also help the healthy development of the market. This is a real market competition. At the same time, the Central Government has painstakingly increased the threshold of the automotive industry and protected large companies for many years. Because, once the price cuts to the various capitals that do not have high profits, they naturally no longer willing to enter this business. In addition to lowering prices, there are other possible means. In addition to continuing to reduce prices, manufacturers should also have other means to save the market. For example, reviving personal car consumer credit business. One of the figures that shocked the industry was that the personal personal car loans in China had a bad debt of 100 billion yuan. It is this 100 billion bad debts that has driven the booming car consumer credit for two years into a hell. Since the beginning of this year, banks have continuously raised the threshold for personal auto loans. Insurance companies have also withdrawn and no longer provide related insurance services. This has caused the number of cars sold through consumer credits to plummet, which is less than a quarter of last year. In the past two years, through the blowout of the auto market, it has released a large number of consumer powers that have a one-time payment capability and are willing to buy a car. Next, the auto market will enter a steady growth period. A lot of new purchasing power is willing to buy cars through consumer credit. However, due to the lack of credit systems for individual automobile consumer credits in China, banks are left with a lingering fear and do not dare to undertake, resulting in a drastic contraction in the sales of various manufacturers. In this context, there are vendors actively involved in the banking business to provide credit support for sales services. Beijing Hyundai and CITIC Industrial Bank reached an agreement to provide credit support to dealers, thus supporting the modern opening of the sales market in the loan sector. Shenzhen Development Bank also said that it will cooperate with Volvo Trucks to provide personal car finance services for the brand cars. BMW Brilliance and China Merchants Bank cooperated to provide credit services. In fact, this move is obviously a manufacturer's own credit guarantee to promote personal consumer credit. For banks, this is undoubtedly a good thing compared to the risks associated with the absence of a personal credit system. The outlook is not that bad. Although there are many downturns now, the outlook for the auto market is not so bad. It is expected that in the second half of the year, the auto market will rebound under the stimulation of various forces. In general, the power to pull the economy is troika—investment, consumption, and exports. Looking at the current situation of economic operation, stimulating consumption in the second half of the year should be an important means to ensure stable economic growth. The macro-control measures made by the central government in March and April will quickly take effect in May and June. Figures show that from January to February, fixed asset investment increased by 53% year-on-year, compared with 43.5% in March, 34.7% in April and 18.3% in May. From January to March, new urban projects across the country increased by 31% year-on-year, 5.9% in April, and 15.7% in May. These figures show that the trend of excessive growth in investment has been contained. This round of economic growth is driven by investment, and investment slowdown will inevitably slow down economic growth. At the same time, the export surplus in May was basically unchanged from the $2.3 billion in the same period of last year. The net exports in May had little effect on the economy. For consumption, although the total retail sales of consumer goods in May increased by 17.8% from the same period of last year. However, taking into account the fact that the SARS epidemic last year was a relatively small base, the consumption in May remained basically stable. In the second half of the year, under the circumstances that investment continues to be contained and exports do not stimulate the economy, stimulating effective demand is expected to become an important means of maintaining a healthy and stable growth of the economy. This will undoubtedly be a good thing for car manufacturers and consumers. Perhaps, in addition to lowering prices, people can also look forward to better individual consumer car credits and a potentially improved consumer environment. (Liyuan) Editor of this site Source: Southern Weekend