On May 12th, Shanghai GM suddenly announced the "official price cut", which caused hot concern in the industry. It is understood that the market guidance price is lowered, involving Buick, Chevrolet and Cadillac three brands, 11 main product series, a total of 40 models. Among them, Chevrolet Copaci 2.4L 7-seat flagship four-wheel drive fell by 53,900 yuan, the main attack of 100,000 yuan market Buick Excelle also has a price cut of 10,000 yuan, Cadillac's price fell between 10,000 to 30,000 yuan. This move is the largest price cut in the mainstream car companies after the Shanghai Volkswagen “Official Drop” triggered the car chain in April.
When the news came out, it triggered comments from all parties. The mainstream view is that the decline in sales growth and overcapacity are the triggers for official price cuts by auto companies. According to data released by the China Association of Automobile Manufacturers, despite the listing of a number of new cars at the Shanghai Auto Show, domestic car sales in April were 1,994,500, a decrease of 10.98% from the previous month and a decrease of 0.49% from the same period last year. Among them, cars and MPVs showed a downward trend. Among the top 10 car companies in terms of sales volume, Shanghai Volkswagen, FAW Volkswagen and Shanghai GM saw a significant decline, with decreases of 5.6%, 16.9% and 16.7% respectively.
According to the Nihon Keizai Shimbun, the production capacity of Chinese automakers is expected to increase by 20% in 2015 from the previous year to 50 million, but the peak sales of new cars are expected to be 25 million. Even if 80% of the production capacity of auto companies is released, there will still be a difference in production and sales of 10 million units. Due to the economic slowdown, sales growth is slow, and manufacturers worried that the market share declines will be difficult to stop the increase in production capacity, which has led to a vicious circle of price reduction competition.
In addition to the decline in sales, high inventory is also an important reason. According to the results of the “Auto Dealer Inventory Survey” released by the China Automobile Dealers Association on April 20, the comprehensive inventory factor of auto dealers in March was 1.77, up 28% year-on-year. The dealer inventory level was above the warning line, and the inventory pressure was still relatively high. Big. Among them, the inventory coefficient of five brands is more than two months. At the beginning of the new year this year, many dealers who survived the cracks have begun to “help” the car companies.
Wang Danqing, a managing partner of Ruixin Zhicheng, said in an interview that behind the price cuts of car companies, it may be the result of mutual consultation between dealers and car companies. Some auto companies have gradually realized that if the price of the saturated Chinese auto market is not reduced, it will be a more serious inventory backlog.
Although consumers have long been accustomed to dealers' price cuts, it is rare for car companies to lower official guidance prices. Because in the minds of consumers, the downward adjustment of the official guide price means that the model has been downgraded, which may have a negative impact on brand power.
Prior to this, Changhua Automobile President Zhu Huarong said in an interview that for a mature automobile market, price war is an inevitable process, which is the law of the development of the automobile market; only through the adjustment of price wars, the market competition continues Intensified will lead to a group of competitive enterprises. "But the price war is not a sustainable practice. At present, Changan Automobile has maintained its proper positioning and pricing, and there is no plan to cut prices yet."
Regarding the phenomenon of “official price reduction”, Zeng Qinghong, general manager of Guangzhou Automobile Group, said: “We don’t want to fight price wars, but we hope that the market will gradually see the price/performance and competitiveness of our products and hand over excellent products to customers.” Guangqi Honda, general manager of Guangqi Honda also said that it will not follow up on price cuts.
According to the analysis, from the perspective of market competition, this phenomenon may become the new normal as more and more car companies join the “official price reduction” army. The price cut may boost sales in a short period of time, but the palliative is not a cure. In the formulation of production and sales planning, in the rational distribution of sales structure, and cooperation with dealers, automotive companies should collectively reflect on how to save themselves.

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