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Price Reduction Bring Great Survival Pressure for Independent Brand

Daisy Huang From 盖世汽车| June 19,2017

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From the one billion Yuan subsidy activity in March by the Great Wall automobile to Changan automobile officially reduce price in the end of May, JAC, SAIC, Geely, GAC and other independent brands also follow the trend of price reduction and it seems to set off a new round of “price cuts".

The main reason is that current automobile market is facing a huge sales pressure. Strategy global partner, vice president of Greater China, Peng Bo said price reduction is mainly because of the market pressure of competition. Auto companies need to further promote sales and dealers need to digest inventory to ease pressure and risk.

He also mentioned that the price cuts can also be seen as industry extrusion for the weak brand by big brands which have the advantage of scale, and for the purpose of market elimination.

Price cut question arises

In fact, since the start of the year, the development momentum of China's auto market has slowed down. At the same time, China automobile association data show that this year the inventory has been high. Vice president of Changan automobile Bing Gong said: "As the market competition intensifies and stocks rise rapidly, price war among manufacturers has been fully started."

Promote the survival of the fittest

Due to the fierce market competition, brands and dealers bear greater pressure. Federation Secretary General Cui Dongshu said in an interview that independent brand to take the "official price down" is actually an initiative adjustment, car companies such as Changan quickly clean up inventory in order to restore the growth momentum and compete with rivals.

The industry insider pointed out that in fact, compared with the developed countries, such as the United States, Germany, Japan, the number of domestic car companies remained in the single digits. Nowadays, dozens of independent brands in domestic bring great pressure for these brands.

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