The Chinese automotive market has undergone frequent changes in 2024, with fierce competition in smart vehicles. Traditional gasoline-powered vehicles, squeezed by new energy vehicles, have seen their product competitiveness improve while prices continue to decline. Consumers today face an unprecedented abundance of options when choosing a new car.

From the perspective of manufacturers, intensified competition and operational pressures are realities they must confront. However, the more severe the "internal competition," the more necessary it is to maintain a clear understanding. Manufacturers must constantly remind themselves: how to uphold their bottom line under pressure, ensure quality in fair competition, and prevent the phenomenon of "bad money driving out good" from occurring in the Chinese market.

On October 18, Great Wall Motor's official Weibo account published a long post, once again mentioning the atmospheric pressure fuel tank incident that occurred over a year ago. On April 11, 2023, due to its high regard for industry standards and environmental protection, Great Wall Motor reported concerns that a certain automaker's hybrid vehicle equipped with an atmospheric pressure fuel tank may have issues with emissions from vehicle evaporation that do not meet standards. In response, national regulatory authorities conducted a comprehensive and in-depth analysis and addressed the issue, making an announcement to the public.

Subsequently, Wei Jianjun, Chairman of Great Wall Motor, posted on Weibo that the sale of new hybrid vehicles equipped with atmospheric pressure fuel tanks has ceased in China. The implication is that pointing out safety and environmental concerns regarding atmospheric pressure fuel tanks was justified and conducive to the fair and healthy development of the Chinese automotive market.

However, Wei Jianjun did not stop there but further noted that millions of hybrid vehicles equipped with atmospheric pressure fuel tanks are still on the road. These existing vehicles may not only harbor numerous potential issues but also infringe upon consumer interests.

As a veteran in the industry for over 30 years, Wei Jianjun remains sober-minded and voices concerns and doubts amidst the unprecedented prosperity of the automotive industry. Superficially, it may seem like "nitpicking" at competitors and inappropriate timing, but in reality, they are driven by a strong sense of social responsibility and industry acuity to promote healthy industry development, practice green and environmentally friendly concepts through action, and enhance consumer confidence in China's automotive industry.

Short-term profitability is not the goal; long-term, steady, and healthy development is the true path forward. This must be emphasized in today's automotive market.

Price wars cannot come at the expense of quality; confidence is more valuable than gold.

In fact, when the atmospheric pressure fuel tank incident surfaced last year, it immediately sparked heated discussions online. Many internet users who were unaware of the full situation did not understand Great Wall Motor's report and even believed that Great Wall Motor was maliciously suppressing competitors due to inferior technology. However, after more than a year, an increasing number of insightful individuals have recognized the importance of standardized and healthy development in the automotive industry.

Why has there been such a shift in perception? Because in the automotive industry, "confidence is more valuable than gold." The current automotive market is experiencing a wave of price reductions, placing significant pressure on automakers.

Data shows that the Chinese automotive market witnessed an unprecedented price reduction spree in the first three quarters of 2024. According to Cui Dongshu, Secretary-General of the China Passenger Car Association, a total of 195 models experienced price reductions in the first nine months of the year, far exceeding the 150 models in 2023 and the 95 models in 2022.

Among these, 71 conventional gasoline-powered models saw price reductions, with an average decrease of 9.3% or RMB 15,000. A total of 69 pure electric models experienced price reductions, with an average decrease of 13.5% or RMB 23,000. Plug-in hybrid models were also not to be outdone, with 29 models seeing price reductions, averaging a 13.7% decrease or RMB 24,000.

As the price war in the automotive market continues to intensify in 2024, the industry is undergoing accelerated transformation. Cui Dongshu predicts that the market will enter a sustained uptrend towards the end of the year.

From Zijin Finance's perspective, the essence of price reductions is to trade price for volume, swapping rapid sales for market share and development space. This not only puts pressure on most manufacturers but also pushes some automakers to the brink of collapse. Consequently, the automotive market is plagued by various irregularities: declining quality, inflated battery specifications, reduced configurations, diminished service levels, and more.

In a recent external communication, Wei Jianjun candidly expressed his concerns. He believes that over the past decade, 24 Chinese automotive brands have exited the market, and current trends suggest that more brands may face a similar fate in the future.

Wei Jianjun emphasizes that while consumers may initially benefit from lower car prices, the used value of vehicles from bankrupt automakers plummets, essentially becoming scrap metal, and maintenance services become difficult to find. He likens this situation to treating consumers like "leeks," with unquantifiable future cost increases that can be even more damaging than short-term price reductions.

Wei Jianjun states that he frequently discusses these issues publicly because fraudulent practices in the market damage the image of China's automotive industry.

According to Zijin Finance's understanding, in market competition, it is not excessive for competitors to innovate their marketing strategies within legal and reasonable bounds, as long as their vehicles are of good quality, environmentally friendly, and safe, and consumers recognize their value. However, once price wars lead some manufacturers to compromise on quality, safety, environmental protection, and the bottom line of providing high-quality vehicles and services, over time, the outside world will lose confidence in the automotive industry.

Once confidence is lost, the impact on the automotive industry is devastating, and restoring it is no easy task as confidence is more valuable than gold. Therefore, amidst increasingly fierce price wars, regulators and industry practitioners should focus on establishing and maintaining market order and rules to prevent consumers from bearing the consequences of chaos.

The consequences are already evident, and the stance of the "guardians" serves as a wake-up call.

An average of ten dealerships close down daily, suppliers are on the verge of collapse amidst steep price negotiations, and automakers often incur losses of tens of thousands of yuan per vehicle sold. The negative effects of price wars are already apparent and continue to spread, impacting dealerships, automakers, supply chains, and the entire industry.

Data shows that the average profit margin of China's automotive industry fell to 5% in 2023, failing to even reach the average profit margin of industrial enterprises. Although conditions have slightly improved this year, suppliers continue to be squeezed to their limits.

In early September, Shen Jinjun, President of the China Automobile Dealers Association, stated that the primary culprit behind price wars is automakers that blindly produce to capture market share without regard for market demand.

On September 20, Li Shufu, Chairman of Geely Holding Group, said at the Taizhou International Auto Industry Expo that price wars lead to cheaper prices but poorer quality and service experiences, ultimately dooming companies that follow this path. Some companies act unethically and recklessly, which will not lead them far.

Wei Jianjun recently noted that price wars result in automakers "only spending without earning," leading to a decline in vehicle quality. In such an environment, automakers lose money on every vehicle sold, with losses ranging from a few thousand to over ten thousand yuan per car, making it difficult for them to sustain operations.

Market data shows that while China's automobile sales have grown significantly in recent years, an increasing number of consumers have reported quality issues with new cars, such as frequent malfunctions and hidden defects. Customer loyalty to brands is also declining, with more people prioritizing price over product quality.

More importantly, the quality issues reflect challenges across the entire supply chain. Under the pressure of price competition, many component suppliers have had to reduce production or choose substandard materials to cut costs, weakening the overall quality of automobiles.

Facing these industry realities, Li Shufu posed a thought-provoking question: When every enterprise pursues short-term efficiency at the expense of long-term value, where will the market head in the future? Amidst increasingly intense price wars, can consumers strike a balance between quality and price? Will the relentless pursuit of low prices truly benefit consumers?

The concerns of industry leaders like Li Shufu and Wei Jianjun regarding the negative impacts of automotive price wars are not arbitrary comments but well-considered appeals. They reflect the worries of Chinese automotive professionals about the healthy development of the industry and the aspirations of all automotive practitioners.

They are not only representatives of the automotive industry but also "guardians" of its healthy and long-term development trajectory. Their stance is thunderous and serves as a wake-up call. An increasing number of insightful individuals have recognized the consequences of price wars. Orderly and standardized industry development is essential for healthy growth, while adhering to environmental protection principles is a requirement for sustainable development. The mutual promotion of these two aspects represents the "righteous path" for the long-term development of the automotive industry.

Consumers should also be aware that short-term price advantages do not necessarily reflect quality, and the importance of quality cannot be replaced. In future purchases, making wise choices between price and quality will test the wisdom of every consumer.

The development goal of China's automotive industry is as vast as the stars and the sea.

Price wars are not uncommon in a market economy. In the 1970s, Japan's economy, recovering from World War II, experienced rapid development, with the electronics industry, home appliance manufacturing, and automotive industry serving as the three pillars of its global expansion. Japanese automobiles leveraged their price advantage to dominate markets previously held by American and German brands, only to face sanctions and policy restrictions from the United States.

Since then, Japanese automakers have focused on refining their internal capabilities, elevating production costs, reliability, and delivery speeds to new heights through lean production methods. By establishing local operations through overseas factories, Japanese automobiles began to venture beyond their borders and truly go global. Today, Japanese automobiles are synonymous with high quality, advanced technology, and low operating costs.

The success of Japanese automobiles did not stem solely from price wars but rather from continuous technological advancements and product competitiveness, earning recognition from consumers both domestically and internationally.

Regarding the current state of China's automotive industry, Wei Jianjun notes that while China leads in electric vehicle supply chains, it lacks an advantage in core technologies. In terms of branding, Chinese automobiles primarily sell products rather than brands, limiting their brand premium capabilities.

Wei Jianjun points out that China lags behind developed countries in traditional internal combustion engine technologies. In the electric vehicle sector, while China boasts the best battery supply chain, the original invention technology originated in the United States, was developed by Japan, and further refined by South Korea. As for electric motors, electric controls, and the chips used, they primarily come from the United States. Chinese electric vehicles perform well in algorithms but still lack core technologies overall.

Wei Jianjun believes that superior quality and robust technical capabilities form the foundation for the globalization of Chinese automobiles, while a comprehensive overseas production and marketing network is the guarantee for Chinese automobiles to truly go global. Facing the reality of China's automotive shortcomings and working diligently to enhance internal capabilities will establish recognition and create brand premiums.

Data shows that Great Wall Motor's revenue reached RMB 91.429 billion in the first half of this year, a year-on-year increase of 30.67%, marking four consecutive years of growth. Net profit reached RMB 7.079 billion, a year-on-year increase of 419.99%. Great Wall Motor sold a total of 554,900 vehicles, a year-on-year increase of 6.95%, outpacing the overall industry growth rate.

In terms of sales figures, 129,800 new energy vehicles were sold, a year-on-year increase of 44.89%, marking four consecutive years of growth. Overseas sales reached 199,800 vehicles, a year-on-year increase of 62.09%, marking eight consecutive years of growth. Notably, Great Wall Motor ranked first among domestic automakers in terms of profit per vehicle at RMB 12,800 in the first half of this year.

Great Wall Motor's achievements represent just the tip of the iceberg in China's automotive development, and through it, we can glimpse the future development goals of China's automotive industry, which are as vast as the stars and the sea.

Zijin Finance believes that whether it's price wars or industry irregularities, they are merely interludes in China's automotive development history. Uniting the entire industry, intensifying technological research and development to enhance product competitiveness, refining operations to bolster branding, and fostering standardized and fair competition represent the correct value orientation for automakers.

Only by unifying the strength of the entire industry and jointly adhering to the universal values of a market economy can we propel China's automotive industry toward healthier, more environmentally friendly, and efficient development.