"We want to clench our fists and fight this battle."

"Dragging luggage to the Chengdu Auto Show, there was no long queue as imagined, and the luggage storage area was not crowded."

"It's 9 o'clock, and there's not even a hint of the usual lively atmosphere with gongs and drums in the hall." The omnipresent giant advertisements for BBA, which dominated the outdoor areas in the past, have vanished. Only two automakers, BYD and Cadillac, stubbornly hang on to their advertisements, preserving some dignity for this grand event in the southwest."

"Does Cadillac still have money for advertisements?" Accompanied by this question, the Chengdu Auto Show began in a leisurely manner. My colleague and I wandered from hall to hall, stopping by the Volkswagen booth to scan a QR code and win a cup of coffee, with no need to queue.

"Desolate" is the polite way to put it.

Lei Jun didn't come, Zhou Hongyi didn't come, and neither did the makers who turned the Beijing Auto Show into a traffic carnival. The spectacle of several brands cramming into the same exhibition hall to compete for time and make announcements is no more.

The goals of all automakers are surprisingly unanimous: three words, "sales volume".

More pragmatic.

Wu Shengbo, CEO of Ford China, once said, "This year's Beijing Auto Show has become a celebrity-driven event, all about stars bringing traffic and not about consumption or products. It's not very sustainable." He believes that after the heat subsides, we must return to humanity and rationality, focusing on consumers and products.

The Chengdu Auto Show, amidst intense competition, has made this wish a reality. Whether voluntarily or not, "automobiles" have returned to the spotlight.

That's a good thing.

The Oil vs. Electric Debate? No Longer Relevant

At the Beijing Auto Show four months ago, the debate between joint ventures and domestic brands over oil and electric vehicles was fierce, with a heated atmosphere as they vied for the right to speak.

Since Tesla stirred up the new energy pool like a catfish, the most common sight at auto shows has been new energy vehicle brands waving flags and shouting slogans about revolutionizing traditional fuel vehicles. Unwilling joint venture brands have gone from sneering initially to angrily ridiculing later.

It was quite lively, with both sides able to engage in a back-and-forth battle.

However, at the Chengdu Auto Show four months later, this trend has undergone a significant change. The oil vs. electric debate? No longer relevant.

"After years of debate, the penetration rate of new energy vehicles has exceeded 50%, effectively crippling traditional fuel vehicles," said a staff member from a traditional automaker, feeling helpless in the face of an unstoppable trend. Nevertheless, he reiterated his stance that traditional automakers are not against the tide but are simply slower on the path of following it.

According to data from the China Passenger Car Association, the monthly penetration rate of new energy passenger vehicles exceeded 50% in July, and it is projected to continue rising to 53.2% in August. "Half of the market is gone, so there's really no need for underhand competition anymore."

The phrase "stand on equal footing" used to be the goal of domestic brands but has now become the bottom line that joint ventures aim to uphold. However, reversing one's destiny? Not necessary; finding a way to survive is the priority.

This year's Chengdu Auto Show is a microcosm of the automotive market. As fuel vehicle prices hit rock bottom, joint ventures have downsized their booths. After collecting a cup of coffee at the Volkswagen booth, my colleague remarked, "There are no activities, and no one from the automaker is here."

Of course, this doesn't mean that German automakers have given up; on the contrary, they seem determined to persist. After all, Chengdu is an important market for BBA, and they can't afford to lose it.

At this auto show, Mercedes-Benz, BMW, and Audi all brought new models. Volkswagen introduced the Tharu XR and the all-new Passat PRO, directly incorporating the entertainment system from its ID series into these vehicles. "Brand elevation, product strength enhancement, oil and electric homogeneity, and intelligence parity. From 80,000 to 320,000 yuan, we have a flagship model for every 10,000 yuan range." SAIC Volkswagen has also laid out its strategy.

Although the fanfare is not as loud as before, the Chengdu market is indispensable in the chess game of German automakers.

Some data suggests that the Chengdu market has a certain preference for fuel vehicle brands. For example, Volkswagen's sales performance in Chengdu is robust. Moreover, compared to the absolute dominance of new energy vehicles in first-tier cities like Beijing, Shanghai, Guangzhou, and Shenzhen, fuel vehicles still maintain strong competitiveness in Chengdu.

Chengdu represents a "golden opportunity" for German automakers.

If German automakers can still bring a host of brands to the Chengdu Auto Show to gain some exposure, the other protagonist in the past drama of "when German automakers stumble, Japanese automakers feast" – Japanese automakers – are showing signs of complacency.

A decade ago, Guangzhou Mitsubishi and Chang'an Suzuki were still present at the Chengdu Auto Show but have since faded from the Chinese market. While Guangzhou Toyota and Guangzhou Honda, which are still in the game, struggle to hide their decline, relying solely on promotional discounts for the "golden September and silver October" period. However, their booths can be described as "deserted," and Nissan did not even participate in the show.

"The stage and the audience are both desolate, and people just pass by," joint venture brands have lost the strength to argue, and strategic silence is the norm for most. Nevertheless, top-selling automakers like Changan and Geely have also chosen to merely participate without making any statements.

In fact, new energy vehicle startups are also less high-profile than before, as the pressure to turn a profit looms large. Ninety percent of new energy vehicle startups are still incurring losses.

Even for well-selling brands like Huawei's AITO, Yu Chengdong admitted at the launch of the new AITO M7 Pro that "every sale of the new AITO M7 Pro results in a loss of close to 30,000 yuan." Following the rapid sales growth of Xiaomi, Lei Jun only dared to emphasize that "building cars is tough, but success will definitely be cool. Xiaomi Automobile is still in the investment phase, and I hope everyone can understand."

At the pre-sale launch of GEEKR 07, Xia Yiping, CEO of GEEKR Automobiles, even shed tears on stage due to the high investments and substantial losses incurred.

Data shows that in July this year, China's automotive industry generated revenue of 797.7 billion yuan, a year-on-year decrease of 3%; profits amounted to 35.4 billion yuan, a year-on-year decrease of 14.2%, which is not an optimistic figure.

Automakers that have yet to turn a profit are like walking on a tightrope, and it remains uncertain whether their days will be easier than those of joint ventures. Although the oil vs. electric debate is no longer relevant at this Chengdu Auto Show, the outcome of this debate remains to be seen.

Because the lack of profit is the biggest problem.

Insights can be gleaned from the financial reports of 2023. Among the 18 domestically listed automakers, six incurred losses, while the combined profits of the remaining 12 totaled only 96.3 billion yuan, less than the profit of Toyota alone. Even BYD, which has the highest sales, only generated a net profit of 30 billion yuan, a fraction of Toyota's profit.

"There's nothing to argue about. Our mission for the second half of the year is to sell cars," said a salesperson from a new energy vehicle startup. "We can't compete with BYD in arguments."

Indeed, BYD was the busiest participant at the auto show, spending lavishly to rent out the entire Hall 9. At the entrance, five bold characters proclaimed, "BYD Exclusive Hall." Occupying a prime location, BYD was surrounded by opportunities.

BYD showcased its entire brand portfolio, including Blade Electric Vehicles, Denza, and FANGCHENGBAO, along with its central technology exhibition area featuring CloudRacer-P, the e-platform 3.0 EVO, and the fifth-generation DM technology, among others. There were also experiential projects in the plaza area, making it the largest-scale presence ever. Even in Chengdu's subway system, passengers could hear announcements: "BYD FANGCHENGBAO reminds you that your stop is approaching."

This grandeur is also due to BYD's consistently strong sales performance in the Chengdu market, where it sold 33,444 vehicles in the first seven months of the year, ranking first.

However, BYD's success is not solely attributable to its pure electric vehicles; its hybrid vehicles have also played a crucial role, accounting for half of its sales. In August, BYD sold 370,000 new vehicles, including 148,470 pure electric vehicles and 222,384 plug-in hybrids.

It can be said that under the current concept of the new energy market, plug-in hybrids and pure electric vehicles have become two competing tracks. "Plug-in hybrids are shining, while the growth of pure electric vehicles is slowing down. Both technical routes must advance side by side," said BYD, which pursues a two-pronged strategy.

BYD has a firm grip on both hands.

Indeed, with BYD in the picture, there's nothing left to argue about in the oil vs. electric debate.

"Betting" on Chengdu and Calling Out Tesla

Unlike BYD, which made a strong impression with its lavish spending, Tesla, as usual, did not attend the auto show, but its presence was undiminished.

"Today, several SUVs just launched in Hall 10 all mentioned the Model Y because it remains the top choice in this segment," said Liu Tao, Co-CEO of IM Motors, in an interview on August 30. Despite increased competition last year, the Model Y maintained its throne, with cumulative sales exceeding 470,000 units.

Hall 10 at the Chengdu Auto Show was the most lively after Hall 9, which was exclusively rented by BYD. It gathered multiple automakers such as Zeekr, NIO, IM Motors, AVATR, and Voyah.

A commonality among these automakers is that they all launched new models. The global premiere of the Zeekr 7X, the AVATR 07, and the newly launched IM LS6 all repeatedly compared themselves to the absent Model Y. Meanwhile, Tesla was busy responding to rumors that it would produce a six-seat version of the Model Y next year, which proved to be false.

As a result, the industry jokes that new energy vehicle startups have channeled their remaining energy into "encircling and suppressing" the Tesla Model Y. Their strategy involves waging a battle of "surpassing" in terms of intelligence.

Xia Yiping, CEO of GEEKR, stated, "Intelligent driving technology has evolved from a premium feature to a necessary technology that consumers are willing to pay for." However, no matter how hard they shout about their technology, if cars don't sell, it's all for naught.

Let's start with IM Motors. Since its launch at the end of last year, the IM LS6 has aimed to capture a significant share of Tesla's market. This time at the Chengdu Auto Show, the refreshed IM LS6 arrived with this determination.

Liu Tao said that the refreshed IM LS6 boasts all-around intelligent capabilities, including the first SUV equipped with the "Lingxi" digital chassis technology, supporting four-wheel steering, LiDAR, the OrinX chip, Qualcomm's Snapdragon 8295 processor, and the IMOS future cockpit.

Moreover, the AVATR and Zeekr booths nearby, showcasing the AVATR 07 and Zeekr 7X, respectively, are also competitors of the IM LS6.

AVATR made its global debut with the third electric vehicle, the AVATR 07, which brings together the latest and most advanced resources and technologies from Changan Automobile, Huawei, and CATL. In fact, AVATR's product roadmap shares similarities with Tesla's approach.

"The Model S and Model X establish the brand position, just like the AVATR 11 and 12. After these two models, Tesla introduced the Model 3 and Model Y, propelling the brand's sales to new heights. Therefore, in this market segment, we must have both a sedan and an SUV," said Yong Jun, Vice President of AVATR, in an interview with the media. The AVATR 07 is AVATR's Model Y, and there will be another groundbreaking product at a similar price point in the future.

Similar to AVATR, Zeekr also made a direct comparison. At its global premiere, Zeekr detailed the dimensions and interior space of the Zeekr 7X in comparison to the Tesla Model Y.

"Some competitors, including the Model Y, feature a fastback design. Many cars are pixel-level copies, but we're taking a different path. The Zeekr 7X has entered a niche market with few competitors," said Zeekr.

Voyah shares this ambition. The pre-sale price range of its high-end pure electric SUV, Voyah Zhiyin, is between 209,900 and 266,900 yuan, overlapping significantly with the Tesla Model Y's price range.

"From a product perspective, we do perform better. Domestic products are generally superior to the Model Y. We must admit that the Model Y has a brand advantage," said Lu Fang, CEO of Voyah Automobile. "Therefore, we aim to build China's brand advantage with better products and services. With Voyah Zhiyin and the Model Y at the same price level, we hope to bring new experiences to Chinese electric vehicle users in this price range."

Upon hearing these words, Elon Musk might think, "You're noble, you're amazing." However, what also troubles Musk is the slow growth of the Model Y, which has given these brands an opportunity.

Opinions on sniping at Tesla are divided online. Some say, "Since they're all targeting Tesla, buying a Tesla can't go wrong…" while others argue, "Domestic new energy vehicle startups have indeed surpassed Tesla."

Nevertheless, a question remains: While it's understandable to join forces to snipe at the Tesla Model Y, which is the sales champion in its segment, why choose Chengdu as the starting point?

The answer lies in Tesla's interest in "Chengdu".

Moreover, the Tesla Model Y is popular in the Chengdu market. Consider these figures: From January to July, Tesla sold 14,659 vehicles in the Chengdu market, with 10,665 of them being Model Ys, enjoying a comfortable market position.

Therefore, Musk has "bet" on Chengdu, while new energy vehicle startups have also declared their intentions there, all hoping to "gamble" on a predictable future for the southwestern market.

The Southwestern Automotive Market: Fist Clenched

"Many automakers prefer to cluster in Chengdu, including Geely Group and Volvo, which have made significant new energy investments in the city," said Zhu Ling, Vice President of Zeekr Intelligence Technology, in an interview.

The most straightforward reason is that Chengdu residents are enthusiastic about car purchases, far exceeding those in first-tier cities like Beijing, Shanghai, Guangzhou, and Shenzhen. Moreover, Chengdu residents are willing to spend on cars. Taking the 2023 Chengdu Auto Show as an example, a total of 35,028 orders were placed during the exhibition, generating transactions worth 6.087 billion yuan.

Previously, Chengdu was known as a paradise for luxury car markets, where even Mercedes-Benz, BMW, and Audi were not considered “luxury brands”. However, this year has seen a downgrade in consumption, with models priced between 200,000 and 300,000 yuan becoming the mainstay in Chengdu's market.

Among the sales data from January to July this year, the top ten ranking features five brands with an average transaction price ranging from 200,000 to 300,000 yuan or even higher, which aligns with some surveys of Chengdu's market.

"In the past, Chinese automakers competed within the 200,000 to 500,000 yuan range, with no formidable automaker entering the below 200,000 yuan segment for intense competition. This represents a turning point, including for XPeng," said He Xiaopeng. Clearly, XPeng also aims to be that "turning point".

Another crucial factor is that Chengdu serves as a critical gateway to the southwestern market. In the first seven months of this year, Chengdu topped the city sales rankings with 332,000 vehicles sold and a vehicle parc exceeding 6 million, making it the city with the largest vehicle parc in China.

Chengdu's ascent to the top of city sales rankings is attributable to the robust growth of new energy vehicle sales. With cumulative sales of 151,000 units in the first seven months, ranking second only to Hangzhou, the new energy penetration rate climbed to 45.5%, driving Chengdu's new energy vehicles on an "upward curve".

Concurrently, to stimulate consumption during the auto show, Chengdu launched a subsidy program worth 100 million yuan. Consumers who purchase vehicles from August 30 to September 20 can enjoy a cash reward of up to 8,000 yuan.

As the "wind vane of the western auto market," the Chengdu Auto Show has always been renowned for its strong sales-driving capabilities. It is commonly recognized in the industry that the "second half" of the auto market hinges on Chengdu. Yan Jinghui, a member of the expert committee of the China Automobile Dealers Association, believes that amid fierce competition in the auto market, sales have become a hard metric for automakers and dealers, pointing to a clear direction.

A salesperson from a joint venture brand revealed, "Our sales supervisor requires us not to miss any opportunity, as everyone could be a potential customer." Every auto sales consultant on the scene is keenly capturing potential customers.

In Hall 4, Huawei's HarmonyOS Smart Selection is situated right across from Mercedes-Benz. The once-distinct divide between the old and new forces is no longer as clear. Although their sales staff have different styles, their determination to sell cars is similar.

XPeng's booth featured five newly launched MONA M03s. The model surpassed 30,000 bookings within 48 hours of its August 27 launch, seen as a significant blow for XPeng, which had been hovering in adversity, finally delivering a powerful punch with the MONA M03's low price and high specifications. He Xiaopeng personally held a delivery ceremony for the first batch of car owners, beaming from ear to ear.

Lin Jinwen, Vice President of Zeekr Intelligent Technology, said in an interview that in the past, Zeekr would conduct roadshows across the country before the Chengdu Auto Show, but this year, the company canceled them due to low efficiency and a lack of help in boosting sales.

In a tough market, sales reign supreme. As a result, the hype around traffic has faded, and the sales attribute has returned. Automakers have become pragmatic and rational, with the cooler Chengdu Auto Show reverting to its automotive essence, marking a turning point for the automotive industry towards sober reflection.

"We want to clench our fists and fight this battle," said an executive from an automaker. Whether it's defending the gasoline-powered vehicle market or battling the new energy wave, the southwestern auto market will be crucial in the second half of the year.

The southwestern auto market starts in Chengdu.