"Price reductions may not necessarily increase sales, but they can definitely hurt others." Li Xiang, CEO of Li Auto, once said.
On April 22, Li Auto officially announced that the 2024 Li Auto L7, Li Li L8, Li Li L9 and Li Li MEGA will adopt a new price system, and both new ordering users and users who have ordered but have not yet delivered can enjoy the new price. For owners of 2024 Li Auto L7, Li Auto L8, Li Li L9 and Li Auto MEGA who have purchased and picked up their cars, Li Auto will provide cash rebates and will push cash rebate notifications through the Li Auto App.
It is worth mentioning that Li Auto rarely participates in "price wars", and this price reduction is the first large-scale price reduction in history.
Old car owners receive cash rebates
Specifically, Li Auto's entire L9 series, the Max version, and the Ultra version of L7 and L8 have all been reduced in price by 20,000 yuan; the Pro versions of the L7 and L8 have been reduced in price by 18,000 yuan; and the entire MEGA MPV model has been reduced in price by 30,000 yuan, with the starting price being 529,800 yuan.
Previously, the Lili L series launched the fourth product Lili L6, with a starting price of 249,800 yuan, and orders exceeded 10,000 units within 72 hours of its launch. Although this product did not participate in this round of price cuts, Liu Jie, vice president of commercial affairs of Li Auto, said that the starting price of the L6 was originally scheduled to be 259,800 yuan, but it was released at a price reduction of 10,000 yuan at the press conference. From this point of view, Ideal is currently in a state of price reduction for all series. Li Auto revealed that the reason for this price adjustment was a comprehensive decision made by the company after evaluating the market environment and the price reduction strategies of competing products.
In addition, while adjusting the price, Ideal also launched new limited-time benefits worth a total value of 10,000 yuan for new car owners, including 5,000 yuan of free color selection and 5,000 yuan of free charging piles.
From the perspective of sales, Li Auto delivered 28,984 new cars in March, a year-on-year increase of 39.2%. In the first quarter of 2024, Li Auto delivered a total of 80,400 vehicles, a year-on-year increase of 52.9%. However, this sales volume is still far from Li Auto's annual target. At the beginning of 2024, Li Xiang announced on social platforms that Li Auto's 2024 sales target is 800,000 vehicles. To achieve this goal, Li Auto needs to sell 200,000 units per quarter. However, judging from the current situation, Li Auto has not yet completed one-tenth of its full-year target. Based on this, Li Auto has adjusted its sales target for 2024 to 560,000-640,000 vehicles. The price adjustment this time is seen in the industry as an attempt to achieve sales targets.
So, after the price reduction, what should car owners who have just purchased a new model do? In this regard, Ideal has learned from previous price adjustments that "stabbed" old car owners in the back, and launched a "cash rebate" for old car owners who have purchased reduced-price models. The "China Times" reporter learned that "cash rebate" is to provide cash compensation to car owners who have purchased MEGA and 2024 L series models. According to estimates from third-party sales data, Ideal will invest between 550 million and 600 million yuan in subsidies for old car owners this time.
After the announcement was issued, reporters noticed that on some social platforms, old Lixiang car owners had already posted notifications of receiving cash rebates from Lixiang Cars. A car owner who purchased the Ideal L9 Ultra posted a picture showing, "This model version has a unified rebate amount of 15,000 yuan." In addition, the Ideal L8 Ultra and L7 Max also give back 15,000 yuan. In the price reduction information, the price adjustment of the above-mentioned models is 20,000 yuan.
In addition, the ideal MEGA is to make up for the reduced price, with a cash rebate of 30,000 yuan. Automotive analyst Wang Kun told a reporter from China Times: "While Li Auto adjusts prices, it also gives cash compensation to old car owners, which is worth learning by auto companies. After all, 'price war' has become the main line of the auto market. Although Consumers can enjoy lower prices when purchasing vehicles, but it will also create a "wait and wait" mentality, worrying that the price will be lower after purchasing the vehicle. This wave of operations can ideally dispel users' concerns. It may lead to sales growth."
More than 40 car companies have started price cuts
In fact, due to factors such as fierce market competition and the warm-up of the Beijing Auto Show, price cuts have become a common operation for car companies in April.
The day before Li Auto announced a price cut, Tesla China announced a price cut of 14,000 yuan for all models. So far, the starting price of Model 3 is 231,900 yuan, the starting price of Model Y is 249,900 yuan, the starting price of Model S is 684,900 yuan, and the starting price of Model X has dropped to 724,900 yuan.
Xpeng Motors also announced on April 20 that it would launch a limited-time car purchase subsidy of 500 million yuan from now until May 5, 2024. Covered models include G9, G6, P7i, and 2024 Xpeng P5, a total of four models.
In addition to direct price cuts, many car companies have also launched trade-in policies. For example, NIO launched a fuel vehicle replacement subsidy of up to 1 billion yuan on April 1. Users of fuel vehicles who replace their NIO vehicles with new ones will receive an additional RMB 10,000 in optional equipment subsidy funds. Chery Automobile has also launched a ten-billion-dollar subsidy replacement season policy update. For a limited time, the purchase tax of designated models is fully exempted. Used cars can be deducted up to 30,000 yuan, covering Tiggo 8 PRO Champion Edition, Tiggo 8 PLUS Champion Edition, Tiggo 9, and Arrizo 8 High-Energy Edition and Discovery 06 and other models.
Regarding joint venture car companies, reporters from China Times visited a number of joint venture brand 4S stores on April 21. Among them, Volvo store sales said: "Currently, a trade-in subsidy of 20,000 yuan is available. Customers can hand over their old cars to us for evaluation and processing."
FAW Toyota sales staff said that from April 1st to 30th, all FAW Toyota models can enjoy replacement subsidies of up to 16,000 yuan, as well as financial policies such as no down payment for up to 8 years and 0 interest rate for 36 periods.
In addition, according to media reports, Zhijie S7 "cut off" orders for Xiaomi SU7 in stores. When you purchase any Zhijie S7 model, after paying the final payment, the non-refundable deposit of 5,000 yuan for Xiaomi SU7 lock-up can be directly deducted from the car price. It is understood that since the launch of Xiaomi SU7, Huawei's major stores have launched this temporary policy, which will last until the end of May.
From this point of view, in order to seize the market, most car companies have launched different preferential policies. According to incomplete statistics from reporters, since April, more than 40 car companies with a total of 128 car series have made price cuts or preferential adjustments, including 84 traditional fuel models and 44 new energy models.
Cui Dongshu, secretary-general of the Passenger Car Association, also recently issued a document stating that the scale of price reductions in the auto market in the first quarter of 2024 has exceeded 60% of that in the whole of 2023, equivalent to the total scale of price reductions in 2022. The main factors affecting price reductions are pure electric and plug-in hybrids. New energy models; judging from the pace of price cuts, the price cuts in 2023 are generally relatively balanced, but the price cuts in 2024 have reached a super strong level in February and March, which is an astonishing level compared to history.
