A 30% Drop in Car Prices? Apple Can't Even, and That's a Natural State of Death for Car Enterprises!
Car enterprises are vying with each other!
Future predictions indicate that domestic car prices will drop by another 30% within the next three years.
On February 28th, BYD (002594) announced the official launch of its new Han Tang Honor version, successfully attracting a large number of consumers' attention, and proposing the concept of "electric is lower than oil", which has raised concerns about car enterprises' "internal circulation" and opening up a new round of "price war". (Source: Hexun Financial WeChat account)
The price drop trend is not limited to BYD alone. Since 2024, over 10 car enterprises have launched promotional policies with discounts or different levels of benefits. As of January early in 2024, the overall market discount rate for domestic passenger cars was approximately 20.4%.
What's worth paying attention to is that experts predict that within the next three years, the average price of domestic cars may drop by 30%.
The widespread price drops among car enterprises may have a significant impact on the domestic automotive market, potentially further increasing the penetration rate of new energy vehicles and leading to a wave of low-priced new cars, which has raised concerns about car enterprises' "internal circulation" and opening up a new round of "price war".
Carmakers have long been "bleeding"!
The inventory warning index remains high!
The hot scene in the automotive market is built on the foundation of carmakers' over-exploitation. (Source: Hexun Financial WeChat account)
Carmakers are generally in a state of loss-making, and the profit rate for the automotive industry has been declining year after year. From 2015 to 2023, the profit rate for the automotive industry was 8.7%, 8.3%, 7.8%, 7.3%, 6.3%, 6.2%, 6.1%, 5.7%, and 5%. Compared with 2015, the profit rate for the automotive industry in 2023 has decreased by 3.7 percentage points. China's automobile market scale and profits account for about 30% of the global automotive industry, but domestic carmakers' total profits are less than 5% of the global automotive industry's total profits, forming a stark contrast.
The head new energy vehicle enterprises are under pressure in 2024. From sales data, it shows that in January, among the 13 car enterprises, 10 of them experienced a decline in shipments, with some companies' declines exceeding 50%, such as Xiaopeng Automobile, and others' declines exceeding 40%.
The inventory warning index remains high!
New energy vehicle enterprises will face increased pressure, which means the competition in the new energy automotive market will become even more intense. To seize market share, carmakers may engage in a price war.
A $50 billion auto project comes to a halt!
The natural state of death for a car enterprise is!
Apple's $50 billion electric vehicle project has been canceled. After competing with Tesla for 10 years and spending billions of dollars, Apple decided to give up on its electric vehicle project, with some employees being reassigned to machine learning and AI departments. (Source: Hexun Financial WeChat account)
Tesla CEO Musk tweeted "Hail" and "Smoking gun" shortly after the news broke, leading many to speculate that this was an effort to congratulate his rivals on withdrawing from the competition before it began. Subsequently, Musk also left comments in other threads saying, "The natural state of death for a car company is".
No exception, Geely, which started the year with a similar "pause"! Early in the year, new force brand Geely Automobile internally announced stoppages and salary cuts, and after resuming production on the first day of the month, it was rumored that the company would suspend production for six months.
From Geely's sales data, it seems that its problems were inevitable. Geely's sales in 2021, 2022, and 2023 were 4,237, 4,349, and 8,681 vehicles respectively. Clearly, the less-than-10,000-unit sales are indeed difficult to sustain business development.
Why have so many car enterprises suddenly emerged? It's because electric vehicle technology has a lower threshold, and with the assembly of body + motor + battery, you can make an electric car. And in the new energy wind direction, capital is easy to get invested, just like the shared bicycle craze back then, where capital flocked to it, but eventually, it would be washed away by the wave.
From sales data, it's not hard to see that head brands are still growing, while mid-tier and small brands are selling less and less, even to a few units or dozens per month. Any misstep at any stage can cause a car enterprise's development momentum to be interrupted. In such an environment, failed enterprises are not necessarily weak, but successful enterprises are definitely strong. And for those new energy car brands that are still preparing to launch, the window of opportunity has become extremely narrow.
The competition among enterprises will become more intense and internalized, and 2024 will be a critical period for industry reshuffling.