The "price war" has spread from domestic to overseas.
Gesch has noticed that Thailand, which is trying to become "Asian Detroit", is becoming a new "battlefield" for Chinese car companies to compete in price.
Many people said that hearing this news, they seemed to smell the taste of Chinese motorcycle enterprises competing in the Vietnamese market at a low price earlier, which inevitably led to the fear that Chinese automobile enterprises would "repeat the mistakes" when they went to sea.
So, is it true that the price reduction has been successful? In order to gain a foothold in the overseas market and become a high-quality global car company, what other "magic weapons" do Chinese car companies have in addition to cost performance?
Who is the "volume" of the price reduction?
The Thai market is of great significance to Chinese car companies.
To a large extent, the ASEAN automobile market, represented by Thailand, will be an important example of China's automobile products going global. At the same time, Thailand has also become the first stop for many domestic car companies to go overseas.
Both foreign auto companies and foreign media are paying attention to the trends of Chinese auto products in the Thai auto market, so as to analyze how Chinese auto companies should go and how far they can go in the overseas market.
Recently, Japanese media reported that in the pure electric vehicle market in Thailand, the curtain of price competition is opening.
It is reported that BYD has lowered the price of new models of major models by 20%; Chongqing Chang'an Automobile will also launch an attack with the ultra small low-cost pure electric vehicle "LUMIN", which has a range of about 300 kilometers and a price of about 480000 THB, the lowest price in the Thai market.
In addition, the pure electric vehicle brand of United New Energy Vehicles also announced that it will launch a small pure electric vehicle starting at about 550000 THB, which is about 30% cheaper than BYD's small pure electric vehicle "Dolphin".
It is worth noting that Gesch observed that this is not the first time that Chinese and Japanese auto companies have "price confrontation" in Thailand.
Since 2023, most Japanese car companies in Thailand have begun to cut prices, which is the first time in decades.
At the end of last year, foreign media reported that the price of new energy vehicles led by Chinese capital was reduced by more than 100000 baht. In this regard, Japanese cars represented by Toyota have launched a wide range of car purchase discounts.
For example, Toyota offers up to 8 years of installment payment discount; Honda spent 52 million baht on the lottery for buying and delivering cars; Suzuki and Nissan gave two years of loan assistance and free gas card respectively.
Hideo Kawasaka, chief executive officer of Honda in Thailand, once said frankly: "The competition with Chinese brands has affected the C and D markets (Honda Civic and Accord)". It is reported that since last year, Honda has carried out a "substantial promotion" on the City, Civic, HR-V and Accord models. Buyers can choose 0% interest rate or a cash discount of 20000 to 30000 yuan.
In addition to the passenger car market, China's new energy vehicles also launched an attack on the Thai cruise taxi market, which is almost monopolized by Toyota. In 2023, Ai'an will cooperate with Thai Petroleum Company (PTT) and the local taxi operating company EV ME in Thailand. In this regard, Toyota will immediately reduce the price of Toyota Corolla models specifically for taxi companies by 30%.
It was even reported that a Japanese car company in Thailand complained to the Ministry of Industry of Thailand that the price of Chinese electric cars was "too low", which was dumping on Thailand. Therefore, Thailand was called on to set a minimum price limit for electric cars, so as to avoid reducing maintenance of Japanese fuel cars in Thailand.
The Thai market has been a "big cake". Although Japanese cars have been here for a long time, most of them stay in the fuel car market. It cannot be ignored that for the new energy vehicle market, Chinese car companies in Thailand also have to face competition from Tesla.
But now, Tesla is also suffering from the price impact of Chinese auto companies.
As BYD, Great Wall Motors and other Chinese electric vehicle manufacturers prepare to start production in Thailand, Tesla's car market prices in Thailand fell 9% to 18%, according to Asia's Nikkei Index. It is reported that Chinese electric vehicle manufacturers, including BYD, have allocated $1.44 billion for new production facilities in Southeast Asia's second largest economy.
In other words, the price reduction measures of China's new energy vehicles have formed a butterfly effect in the Thai market. So, what's the confidence of Chinese auto enterprises behind this price reduction?
CRRC launches a "price war", is it forced or active?
According to Gesch Auto Watch, there are three main reasons why Chinese auto companies can start a "price war" in the Thai market.
First, the subsidy policy for new energy vehicles in the Thai market was supported.
As early as 2022, Thailand signed a trade agreement with China, almost abolishing tariffs on Chinese electric vehicles. This tax can be as high as 80% for imported oil vehicles in Europe, and about 20% for Japanese vehicles.
It is reported that at that time, the price difference between Great Wall Euler and Nissan Leaf electric vehicles, which should have been at the same price, could be as high as 50000 yuan in Thailand.
According to the new policy, from 2024 to 2027, the Thai government will provide consumers who purchase new energy vehicles with a subsidy of up to 100000 Baht per vehicle. From 2024 to 2025, the import tariff of new energy vehicles with a price not exceeding 2 million baht (about 394640 yuan) will be reduced by 40%; The consumption tax on imported new energy vehicles with a price of no more than 7 million baht (about 1381240 yuan) will be reduced from 8% to 2%. The automobile manufacturers enjoying this preference will produce twice as many new energy vehicles as their exports in Thailand in 2026 and three times as many new energy vehicles locally in 2027.
In addition, in terms of tax, it is stipulated that if pure electric vehicles are produced and the investment amount is not less than 5 billion Baht, including 100% foreign ownership, land title deed of permanent ownership, exemption from corporate income tax for up to 8 years, additional preferential rights can be obtained if investment in research and development is made.
On the other hand, the Thai government also invested 2923 million baht as a subsidy for car purchase to encourage consumers to purchase and use electric vehicles. For example, eligible electric vehicles will be given a price subsidy of 70000-150000 Baht (about 13300-28600 yuan).
Secondly, the supply chain advantages of China's automobile industry are helping OEMs effectively control costs.
You should know that Japanese fuel vehicles have been deeply rooted in Thailand for a long time, which directly led to local parts suppliers in Thailand being more skilled in fuel vehicle parts. In addition to interior trim, tires and other parts with low technical capability requirements, Thai local manufacturers cannot supply core parts for Chinese electric vehicles in a short time.
In addition, Thailand also provides subsidies and support to domestic new energy auto parts suppliers, which leads Chinese auto parts manufacturers to choose to settle in Thailand to serve Chinese auto enterprises.
It is reported that in terms of the battery industry chain for electric vehicles, there are currently 18 projects under construction in Thailand, involving battery production, module production, module assembly, etc. The total investment in battery related projects in Thailand has reached 39 million US dollars. Thailand has reduced or exempted the import tax on raw materials for module production to a maximum of 90%.
Gaishi Motors noticed that on April 17, Thailand's BOI (Investment Promotion Committee) announced that, under the incentive of Thailand's preferential measures, seven battery giants, including Ningde Times, China Innovation Airlines, Yinpai Battery, Yiwei Lithium Energy, Guoxuan High Tech, Xinwangda, Honeycomb Energy, all expressed their interest in investing in Thailand.
This year, at least two Chinese battery giants will land in Thailand, bringing more than 30 billion baht of investment. That is to say, the industrial chain of Zhongshi electric vehicles will be more perfect.
Finally, Gesch also observed that compared with the domestic market, Chinese new energy vehicle manufacturers have reaped higher single vehicle profits in Thailand.
According to the 2024 economic outlook report released by NESDB, the new registration of electric vehicles in Thailand will be 76538 in 2023, an increase of 695.9% compared with 9617 in 2022. Among them, the registered number of BYD is 30467; Nezha registered 12777 vehicles; The registered number of famous knights is 12462; The registered number of Tesla is 8206; The registered number of Great Wall is 6746.
In other words, among the top five electric vehicle enterprises registered in Thailand in 2023, four Chinese automobile enterprises are among them and occupy the top three.
It is worth noting that, from the perspective of production capacity, the 2024 economic outlook report shows that the production capacity of electric vehicles in Thailand is all from Chinese automobile enterprises, of which Nezha has the largest production capacity, reaching 200000 vehicles.
It is also the Thai market that is providing Nezha Motors with higher bicycle profits.
According to relevant industry data, based on the current pricing of new energy vehicles in China, BYD Atto3 (the domestic version is RMB Plus), Thailand is priced at 1099900 THB (about 225300 yuan), and the domestic price is 139800 yuan (after subsidies), with a premium of about 61%.
NETA V (Nezha V) is priced at 760000 THB (about 155600 yuan) in Thailand and 73900 yuan (before subsidy) in China, with a premium of about 110.6%.
That is to say, compared with China, China's new energy vehicles have more profit space in Thailand. In addition, compared with BYD Atto3, Nezha's complete vehicle products also have a larger premium space in the Thai market.
Based on this, we may judge that the price reduction of Chinese new energy vehicles in the Thai market means more initiative.
How to fight the price war? High price, lower price later? Low price, then increase price?
However, does selling more and earning more mean you can lower the price without scruple?
In fact, it is not.
There is no denying the fact that, at present, Chinese new energy vehicle enterprises have launched a "price war" in the Thai market. In addition to fighting against Japanese fuel vehicles and Tesla electric vehicles, there is also more or less the phenomenon of "hurting the enemy by a thousand".
The first is the damage to the service system caused by too fast price reduction.
A Thai car dealer once told the relevant media in the industry: "Frequent price cuts by Chinese car companies have had an impact on the local consumer market. On the one hand, it is not conducive to consumers who have already bought vehicles, and on the other hand, it is not conducive to healthy competition in the local market."
"Car companies cut prices too fast, dealers are under pressure, profits are difficult, not to mention good service." The lack of after-sales service will consume consumers' reputation and brand recognition.
The second is "self roll".
Some media found after field research in the Thai market that the Great Wall Thai store sales said that because of the shorter delivery cycle of other Chinese car companies, there was indeed a phenomenon that the orders of Euler turned to BYD Dolphin and Dark Blue. "Especially BYD! They always promise to pick up the car within a week," said the interviewee.
In addition, Thailand's headline news media reported that the Thai market has paid high attention to China's domestic dynamics. Whether it is the Great Wall Motors' report on BYD in 2023, the recent release of Xiaomi Motors, and the comments of many car enterprise leaders, they have attracted attention in Thailand.
In other words, infighting has already damaged the overall reputation of Chinese cars in overseas markets.
Thirdly, price reduction promotion is too urgent to ignore the long-term principle.
You should know that, as a typical case of successful automobile going overseas, the advantages of Japanese automobile enterprises are system capability and service capability.
Japan Auto Sail focuses on the cooperation between auto companies and auto companies, auto companies and parts companies, as well as the close combination of auto business and financial services, equity investment, law, cultural training, public relations and media, information and intelligence.
It is reported that most of the automobile industry consulting companies in Thailand are Japanese funded. They collect consulting fees from Japanese automobile enterprises, collect information for Japanese automobile enterprises in Thailand, formulate strategies, and even influence the policy formulation of the Thai government.
Finally, the old car owner was assassinated.
It has to be admitted that price reduction is the most direct way to sell finished vehicle products, but it is also one of the most harmful means to old car owners. After all, the price reduction will directly affect the brand value preservation ratio. For Tesla, which frequently cuts prices, the decline of hedging ratio is one of the most typical cases.
In this regard, a dealer told the media that Chinese auto companies should learn from Toyota's pricing method: lower the price when pricing the whole vehicle, and with the market stabilizing, increase the price little by little, banks and other financial institutions will also recognize the value of the brand more and more high, which is the correct way.
In short, car sales are not a "one shot deal". Remember not to consume car brands into "flash stores". (Geshi Auto Park Jingming)
