China’s car market is undergoing a price war, with a magnitude of price reductions and a wide range of impacts that even many automotive practitioners did not anticipate. In early 2023, Tesla led the way in reducing prices, bringing the prices of Model 3 and Model Y to the price range of 200,000RMB-300,000RMB ($30,000-45,000 USD), forming positive competition with various domestic electric vehicle companies. Subsequently, car brands such as NIO, XPENG, LEAPMOTER, NAZHA, BYD, ZEEKR, AITO, and others have chosen to offer discounts and promotions, officially launching an electric vehicle price war.
Just when everyone thought that the price war was only confined to the electric vehicle field, DONGFENG Motor Group launched a limited-time subsidy in Hubei Province, which can be said to be a suicidal price cut for the Citroen C6, allowing the long-silent French car to make a presence by lowering prices. Under the impact of the price reduction effect of DONGFENG Motor, many car companies have started to choose to offer discounts and promotions, and currently, more than 30 car brands have launched various types of preferential activities, including not only direct cash discounts but also insurance subsidies, financial interest subsidies, and other forms.
The Citroen C6 fired the first shot of this round of price cuts for gasoline cars, but it is not an easy task to obtain the subsidy. In terms of models, sales personnel stated that the C6 Co-Creation edition with an official guidance price of 211,900RMB has been sold out, and only Comfort edition models with an official guidance price of 226,800RMB are currently available for pre-order. In terms of price, buyers need to pay a subsidy of 90,000RMB in advance and a non-transferable deposit of 45,000RMB for three months, which means that the first payment is 294,049RMB. Among them, the subsidy of 90,000RMB will be refunded after 7 working days, and the deposit of 45,000RMB will be refunded after the data is approved within 45 working days. The final subsidy will lead to a bare car price of 136,800RMB (approximately $21,000 USD). In addition, the final cost of purchasing the car needs to add a purchase tax of approximately 16,088.5RMB, insurance costs of approximately 5,500RMB, and a license fee of 660RMB, resulting in a total cost of 159,049RMB (approximately $24,000 USD).
In addition to Citroen C6, brands such as BYD, Mercedes-Benz, and BMW have also implemented varying degrees of price cuts. Currently, the BYD Song PLUS and the Sea Lion models can indeed enjoy the official preferential policy, but there are no other discounts, and both models are currently available for delivery at any time. The Mercedes-Benz C-Class and E-Class models have discounts of around 60,000RMB and are available for delivery. The BMW i3 and iX3 models have discounts of about 100,000RMB, approximately $15,000 USD.
China’s electric vehicle industry has entered a period of rapid development since 2022, which has caused a great impact on gasoline cars. In the first two months of this year, China’s passenger car sales fell by 21% year-on-year, while electric car sales in February increased by 61% year-on-year, with a penetration rate of 31.6%. Electric vehicles led the way in the price war, and gasoline vehicles also had to use price cuts to cope. In addition, the implementation of the National VI-B emission standard in July this year is also an important reason. Compared with the current National VI-A, the National VI-B emission standard is stricter, with a reduction of about 50% in total hydrocarbons and non-methane hydrocarbons, and car companies cannot meet the new standard by simple upgrades and transformations. This also means that car companies need to sell off their inventory as soon as possible, so taking advantage of this price-cutting wave to clear inventory is also a good opportunity.
