Entering August, automakers released monthly sales data as scheduled amidst disputes over weekly sales rankings. Consumers are particularly concerned about whether automakers' purchase incentives will continue. Especially after recent media reports about "BBA withdrawing from the price war" and automakers' understanding of new industry development regulations, consumers are particularly concerned about automakers' attitudes, regardless of whether the price war continues or the intensity of price reductions changes.

At the end of July, many automakers were exposed as planning to adjust incentives in August. What is the actual situation? Do automakers have new sales promotion policies? Auto Market Insight conducted field visits.

▍Joint venture automakers "act honestly"

As August begins, automakers have successively released their sales figures. Compared to independent brands, joint venture brands face greater pressure. Taking Japanese brands as an example, the July sales figures for the three major automakers in China have all been released. Toyota sold 143,400 vehicles, a year-on-year decline of 6.1%. Honda sold 52,567 vehicles, a sharp decrease of 41.4%. Nissan sold 47,102 vehicles, a decrease of 20.8%.

Toyota and Honda's sales have declined for six consecutive months, while Nissan's sales have declined for four consecutive months. Toyota's PR manager attributed the sluggish sales to "increasingly fierce price competition centered on Chinese automakers."

Prior to August, "preparing for price increases" was considered an important trend in the terminal markets of joint venture brands. During Auto Market Insight's visits at that time, many car salespeople expressed the possibility of slight price increases in August. However, in the latest visit, several joint venture brand salespeople told Auto Market Insight that price increases have not yet been implemented. "Stable incentives" are currently the primary trend in the auto market.

It is noteworthy that some joint venture automakers have even increased incentives. FAW-Volkswagen has launched a trade-in subsidy campaign for its entire model range, offering up to 31,000 yuan in subsidies, including government subsidies, further expanding from July's trade-in subsidies.

FAW Toyota has also further increased trade-in subsidies. From August 1st to August 31st, combined with government subsidies, the comprehensive subsidy can reach up to 27,000 yuan.

Chang'an Mazda officially launched the 2024 CX-30 on August 1st. Compared to the old model's official guidance price, the new CX-30 has a maximum price reduction of 32,000 yuan, with a starting price directly below 100,000 yuan.

Dongfeng Honda also announced limited-time purchase benefits in August, with bare car prices starting at 135,900 yuan for the CR-V, 101,900 yuan for the Civic, and 132,800 yuan for the Inspire, further increasing incentives.

It is worth noting that in addition to joint venture automakers, some independent brands such as Geely, AVITAR, and BYD have also followed suit with August subsidy policies. Overall, although automakers' promotional efforts in August were not particularly aggressive, they did not significantly decline either. Some automakers have added financial, car insurance, and other purchase subsidies.

▍Joint venture brand 4S stores continue to "bear the pressure"

The "golden September and silver October" following August are crucial for influencing automakers' annual sales trends, but this may still leave 4S stores in a situation where they "lose more as they sell more."

According to data released by the China Automobile Dealers Association, China's auto dealer inventory early warning index in July was 59.4%, up 1.6 percentage points year-on-year and down 2.9 percentage points month-on-month. The inventory early warning index remains above the boom-bust line, indicating an unprosperous period for the auto circulation industry.

Luxury brands are no exception. A Mercedes-Benz 4S store salesperson told Auto Market Insight that while sales in the first half of the year were higher than the same period last year, profits were very poor. "Last year, we were profitable, but this year's first half has been consistently loss-making. The best-selling models, the GLC and E-Class, are also sold at a loss, and other models in the store are sold below cost." Selling at a loss is better than not selling at all, which has become a true portrayal of the store's situation.

The salesperson also told Auto Market Insight that there would be no policy adjustments from the manufacturer in the third quarter, but Mercedes-Benz plans to increase sales by 10% compared to the second quarter. "This will result in even more inventory pressure. The store can only sell at a loss to avoid total losses, and the future price trend is not optimistic."

This is even more true for mainstream joint venture brands. A salesperson from GAC Honda said that the best-selling model in the store is the Accord. While sales in the first half of the year could barely keep up with the sales pace, this came at a significant loss. According to their calculations, each car sold in the store averages a loss of 8,000 yuan. "Even cars like the Fit need to be sold at a 10,000 yuan loss." Facing such a situation, the manufacturer has no policy adjustments in the third quarter, and the purchase prices of plug-in hybrid Accords and Crown have even slightly increased. "It's tough selling each car now."

Salespeople from SAIC Volkswagen, Volvo, Buick, and other joint venture automaker 4S stores also told Auto Market Insight that there are currently no profitable cars in the store. Just the interest payments to financial institutions are very high, and being able to maintain a "no loss" situation is already considered very good. However, most are still sold at a loss, especially under pressure from inventory accumulation by the manufacturer. "Selling cars at a loss" will continue.

Tian Tian, Deputy Secretary-General of the China Automobile Dealers Association, also told Auto Market Insight that "enterprises should focus on the survival quality of dealers." Excessive price wars not only increase dealer profitability pressure but also damage the brand's value among consumers at low prices. In the long run, the relationship between enterprises and dealers will become more strained, which is not conducive to long-term development.

However, compared to the difficulties faced by joint venture brand 4S stores, the erosion of the market by independent brands is also reflected in 4S store sales. "Except for a few models, almost all models in the store currently need to be ordered, with delivery times ranging from 4 to 12 weeks," said a BYD salesperson to Auto Market Insight.

The Geely brand is also relatively better off. "Especially with the recent car-buying festival that started in August, the number of visitors to the store has increased significantly, mostly focused on the Boyue, Emgrand, and Xingyue models, which are currently the best-selling in the store." Regarding the current profitability of the store, the salesperson said that while some models are still sold at a loss, the best-selling models can still maintain positive profits.

An industry expert said that based on the current sales situation of joint venture brand 4S stores, he predicts that the situation of "not being able to sell cars at a good price" will not change until at least the end of this year, unless the price war gradually stops and inventory levels at joint venture brand 4S stores drop to a lower level. However, from the current situation, manufacturers and 4S stores are at opposite ends of the balance, and how to strike a balance will be crucial.

Typesetting | Yang Shuo, Image Sources: Auto Market Insight, Shutterstock, FAW-Volkswagen