Introduction

Introduction

High-end brands are limited in number.

In China's business society, there are many classic success stories, such as Pinduoduo, which many people still sneer at.

In its early days, Pinduoduo effectively tapped into and activated the long-neglected market segment of third- and fourth-tier cities and rural areas by leveraging its unique social e-commerce model and precise targeting. It employed innovative strategies to meet the demand for cost-effective products and services among consumers in the sinking market, rapidly amassing a vast user base.

This success story clearly demonstrates that the sinking market is not devoid of spending power; rather, it requires products and services that better align with its consumption habits and needs. Therefore, Pinduoduo's success not only validates the potential of the sinking market but also provides valuable insights for other enterprises and industries.

The automotive industry, as a long-standing and technology-intensive sector, has also mirrored this reality: Whether looking back at its glorious past or examining the current market landscape, the largest consumer base remains rooted in the mid-to-low-end product market.

In the early days of the automotive industry, due to limited economic development, consumer demand for automobiles primarily focused on practicality, affordability, durability, and other basic attributes. As a result, those who could provide cost-effective mid-to-low-end models naturally became market favorites, with sales continuing to climb, laying a solid foundation for the industry's initial development.

Today, despite the rapid growth of the premium automotive market amid economic prosperity and rising consumer incomes, the mid-to-low-end segment retains its irreplaceable position. This is because mid-to-low-end models still meet the basic travel needs of numerous first-time car buyers.

The mid-market holds significant potential

During the recent seven-day National Day holiday, the Chinese automotive market witnessed a sales boom, with various automakers announcing their order volumes.

During the National Day holiday, Huawei's HarmonyOS Intelligent Driving saw its total order volume exceed 28,600 units across its entire lineup, with the Zhijie R7 surpassing 9,600 orders, the Wenjie M9 exceeding 7,800, and the Wenjie M7 topping 9,000. NIO added over 20,000 new orders, Xiaomi Automotive secured over 6,000 bookings, and Zeekr received over 10,000 large orders.

Additionally, XPeng added over 16,000 new orders, Leapmotor booked 17,397 vehicles during the holiday, ARCFOX garnered 5,252 orders within seven days, and BlueArk secured a cumulative total of 14,465 large orders during the holiday.

These figures underscore the robust sales trend in the domestic automotive market during the National Day holiday. Notably, new energy vehicles (NEVs) performed particularly well, with new vehicle sales during the holiday up 11.7% year-on-year, and NEV sales surging 45.8% year-on-year.

In fact, the National Day holiday order data reveals a clear trend: Domestic premium brands are gradually taking shape and occupying a significant market share. This is evident not only in the rapid growth of order volumes but also in the marked improvement in consumer recognition of domestic brands.

The outstanding performance of domestic premium brands such as Huawei's HarmonyOS Intelligent Driving, NIO, Xiaomi Automotive, and Zeekr underscores this trend. These brands have successfully attracted the attention and favor of consumers through their exceptional product capabilities, innovative technology applications, and continually optimized user experiences.

Meanwhile, other brands face significant challenges in breaking into the premium market. Market differentiation has led to heightened consumer brand awareness and loyalty, making it challenging for new brands to establish a strong image and reputation in a short period.

Returning to the topic at the beginning of this article, everyone aspires to enter the premium market, but building a premium brand is no easy feat. The number of such brands globally is inherently limited.

Take the global automotive market as an example; well-known premium brands like Mercedes-Benz, BMW, and Audi are indeed few and far between. These brands have stood out in the premium market due to their long-standing brand histories, technological prowess, product quality, and exceptional user experiences.

Thus, rather than engage in fierce competition and face immense market pressures and uncertainties in the premium market, it may be more prudent and practical to adopt a strategy focused on the mid-to-low-end market first, gradually building brand strength and market experience before ascending to higher tiers in this era of uncertainty.

In the past, Leapmotor provides a vivid example. As a newcomer in the NEV market, Leapmotor did not blindly pursue short-term gains in the premium market but instead chose to enter the mid-to-low-end segment. By offering cost-effective products and superior services, it gradually won the trust and support of consumers.

Similarly, XPeng, having learned from its past experiences, is another notable case. Facing intensified market competition and diversified consumer demands, XPeng has adjusted its market strategy, shifting its focus away from solely pursuing premium market share. Instead, with products like the MONA 03 and XPeng P7+, it has placed greater emphasis on the mid-to-low-end market.

As we have discussed, for a new enterprise, should it aim upwards or downwards? In retrospect, starting from the mid-to-low-end market and gradually ascending may be a wiser and more feasible strategy. By accumulating experience in this segment, enterprises can gradually enhance their brand strength and market competitiveness, laying a solid foundation for long-term development.

No Toyota, No Lexus

It is understandable that traditional Chinese automotive brands have endured a long and arduous 60-plus years in the fuel-powered vehicle era, facing fierce competition from powerful foreign brands globally. Chinese brands have struggled to survive in the cracks, enduring numerous hardships, challenges, and setbacks while seeking their own development space.

This historical backdrop has instilled a dream of ascending in every Chinese brand – to stand on equal footing with, or even surpass, foreign brands in the market, becoming industry leaders. This dream encompasses not just market share but also a comprehensive upgrade in brand strength, technological prowess, and international influence.

Hence, the advent of the new energy era presents an unprecedented opportunity for Chinese brands to realize their dream of ascending. Recognizing the immense market potential, Chinese brands are pouring significant resources into premium branding, investing heavily in technological research, product innovation, and brand building. Their determination and courage are commendable.

However, while encouragement is warranted, brands striving for the premium market must face reality, clarify their positioning and strengths, and formulate practical development strategies. Only then can they secure a foothold in the future market competition.

Conversely, this is a crucial juncture for Chinese automotive brands to take a grounded and steady approach, gradually breaking through from the bottom up. The correctness of this strategic choice lies in two primary aspects.

Firstly, China's NEVs have successfully secured a first-mover advantage, gaining the strength to compete with foreign brands. Foreign brands' advantages in the fuel-powered era, such as technological barriers and brand influence, are less pronounced in the NEV sector. As such, Chinese automotive brands have an opportunity to gradually enhance their capabilities and break through from the bottom up through steady development strategies in this emerging market.

Secondly, new automotive enterprises have blazed a trail in new technologies, providing valuable insights for traditional brands. They have achieved significant breakthroughs in new technology R&D, intelligent driving, and intelligent networking, effectively reducing the cost of these technologies. Traditional brands can leverage the success of new automotive enterprises, combine their strengths, and undertake targeted technological innovation and product upgrades.

In retrospect, the Chinese automotive industry undoubtedly needs players like Leapmotor and XPeng, who forge ahead in new technologies and low costs. They inject fresh vitality and innovation into the entire industry, spurring traditional automakers to rapidly catch up in the NEV race.

Only when traditional automakers swiftly embrace the NEV fast lane can the Chinese automotive industry truly nurture and possess its own "Volkswagens," "Toyotas," "GMs," and "Fords." This transformation entails not just a battle for market share but also a comprehensive upgrade in brand influence, technological innovation capabilities, and global market competitiveness.

Thus, the Chinese automotive industry can give birth to more premium brands akin to "Audis," "Lexuses," "Mercedes-Benzes," and "BMWs."