Guangzhou Auto Show is the last major auto show of the year, naturally becoming the starting gun for the year-end battle among automotive companies.
This year’s Guangzhou Auto Show remains highly anticipated, with car manufacturers showcasing their flagship products and extensive sales teams. According to the organizers of the Guangzhou Auto Show, the total number of exhibited cars this year is 1,132, including 469 new energy vehicles.
It’s worth noting that, amid an increasingly competitive environment, car manufacturers are accelerating the pace of new car launches to boost sales. The show features 59 global debut cars, with numerous brands unveiling new and significant models, adding excitement to the year-end push in the national automotive market.
Intense Competition for New Products, Price Reduction Remains the Theme
New products have always been an effective means for car manufacturers to boost sales, especially in the first year after a new car’s launch. In the Chinese market, the development cycle for new energy vehicles has been shortened from around five years to within 48 months or even 36 months.
According to the organizers of the Guangzhou Auto Show, there are 59 global debut cars at this year’s event, including 8 from multinational companies. Compared to last year’s show, which had 38 global debut cars, including 9 from multinational companies, the increase highlights the competitiveness of the market.
Among the highly anticipated debut models are BYD’s first mid-sized all-electric SUV, the Hanlin 07 EV, Great Wall’s Tank 700 Hi4-T, the Smart-Space S7 powered by Huawei HarmonyOS 4.0, Xiaopeng’s first MPV model, the X9, and the first all-electric flagship model from NIO, the MEGA.
Some exhibitors commented, “The new car releases at this year’s Guangzhou Auto Show are too tightly packed, to the point that within the same hall, there is a lot of overlap in timing, and it seems like the leaders are practically shouting to sell cars.”
Additionally, it’s evident from this year’s model releases that car manufacturers are cautious about pricing. Many official prices for debut models are below market expectations or lower than the prices of the previous generation models.
For example, Polestar announced a delivery price of ¥299,900 to ¥399,900 for the Polestar 4 during the Guangzhou Auto Show. This is approximately ¥50,000 lower than the displayed price at the Shanghai Auto Show in April. This price adjustment indicates that, facing the competition in the Chinese new energy vehicle market, Polestar is eager to participate by lowering prices.
At the Guangzhou Auto Show, various car manufacturers offered significant discounts. Executives in the industry no longer deny or conceal their attitude toward “price wars.”
Meng Xia, CEO of Volkswagen Passenger Cars China, mentioned at the auto show, “In addition to price, user trust is also one of the factors in maintaining brand competitiveness. Volkswagen will not blindly engage in price competition.” He also stated that Volkswagen is committed to providing excellent products to consumers in China at attractive prices, not just through price reductions.
Volkswagen can be considered a beneficiary of the price war in the automotive market. After a substantial price reduction for the pure electric ID family in July, sales of the Volkswagen ID series surged. Especially the Volkswagen ID.3 achieved nearly a fourfold increase in sales in the second month after the price reduction.
Intensifying Market Competition, Profitability Challenges for Car Manufacturers
With a large number of new cars launched at the Guangzhou Auto Show and factors such as price reductions and promotions by car manufacturers, the year-end auto market is widely optimistic.
The latest data from the China Passenger Car Association shows that from November 1 to 12, retail sales of passenger cars reached 538,000 units, an 18% increase compared to the same period last year. The China Passenger Car Association believes that as the auto market gradually strengthens, the confidence of car manufacturers in achieving their annual targets is increasing, and the year-on-year growth in November is expected to exceed 20%.
The China Passenger Car Association believes that the auto market this year is expected to stably reach the annual sales target of 9 million units. Some institutions even provide more optimistic expectations.
Dongguan Securities believes that the fourth quarter is the traditional peak season for the auto market, and national and local policies to promote new energy vehicle consumption are expected to continue. With car manufacturers continuously launching new products and initiating another round of price reductions and promotions, stimulating demand further, the sales of new energy vehicles in the fourth quarter are expected to continue to rise, with an annual target exceeding 9 million units.
However, the increase in sales of new energy vehicles has not eased the current intense competition, and profitability remains a major challenge for car manufacturers.
During the Guangzhou Auto Show, Zhuang Jingxiong, General Manager of SAIC General Motors, bluntly stated that selling new energy cars “is embarrassing if you are not losing money.”
Huatai Securities stated in its latest research report that since November, the discount rate in the automotive industry has continued to rise. The institution’s tracking data shows that the current average discount rate in the automotive industry is 5.93%, while during the same period last year, this number was less than 3%. The latest data from the National Bureau of Statistics also shows that in October, the price of new energy passenger cars decreased by 4.6% year-on-year.
With the intensification of competition in the auto market, the process of industry survival of the fittest is accelerating. Liu Jie, Vice President of Business at NIO, said in an interview with media outlets, “The period from 2023 to 2025 is a stage of elimination for new energy vehicles. By the end of next year, the top contenders should have stabilized, and new energy companies on the table will further expand their market share in the later stages.”
In fact, this year’s Guangzhou Auto Show saw the absence of several well-known brands, including GAC Mitsubishi, which recently announced its exit from the Chinese market, struggling companies like WM Motor and Aiways, and Dongfeng Peugeot Citroen, which initiated a price war earlier this year.