Autonomous car enterprise west approach challenges price ceiling is difficult to break

In a sense, at present, the western market has become a "safe haven" for independent brands. Relevant statistics show that in the first half of the year, the sales growth rate of the entire automobile market exceeded 10%, while the sales of new cars in the eastern coastal cities averaged only “microgrowth” of 2%.

However, as consumption upgrades and joint venture brands press harder and harder, independent brands have begun to face greater challenges in the western market. According to industry insiders, “own brands must start with product quality, and at the same time break through the ceiling of prices, they must seize the opportunity for the rise of the western market.”

The last safe haven for independent brands?

In the first half of the year, the domestic market share of independent brands declined. Data from the China Automobile Association shows that in the first half of this year, the domestic market share of self-owned brand passenger cars fell by 0.23 percentage points year-on-year, accounting for 41.16% of the total passenger car sales. In addition to fierce market competition, Dong Yang, secretary-general of the China Automobile Association, once said that “the policy of restricting the purchase of autos in first-tier cities has caused a significant impact on independent brands”.

The decline in domestic market share, and the performance of independent brands' overseas markets are not satisfactory. According to data from the China Automobile Association, the export volume of automobiles in the first half of the year decreased by 0.6% year-on-year to 468,800. Including Chery, Hafei, Great Wall, Jianghuai and other mainstream export vehicle enterprises, overseas markets have experienced varying degrees of volatility.

"'Internal and diplomatic difficulties' have caused the independent brands to focus on the western market," said Cui Dongshu, deputy secretary-general of the National Federation of International Students.

This is primarily due to the high growth potential of the western market. In the first half of the year, the sales growth rate of the domestic auto market exceeded 10%.

Even if the current growth rate is maintained, “the vehicle ownership in the western market will still be difficult to reach saturation in the next 10 to 15 years.” Luo Lei, deputy secretary-general of the China Automobile Dealers Association, predicts.

“In a sense, the western market has gradually become the support point for the growth of self-owned brand sales.” Cui Dongshu believes.

A person in charge of the Geely Automobile Sales Company told the reporter, “In recent years, Geely’s sales in the western region have grown rapidly. In the first half of this year, Geely’s sales in Shanxi Province exceeded 10,000 units, an increase of 54% year-on-year; Guizhou’s sales reached 8,200 units. , an increase of 30% year-on-year; sales in the Gansu region reached more than 7,700 vehicles, up 25% year-on-year; sales in Sichuan also reached 9,100 vehicles, up 14% year-on-year, becoming an important driving factor for Geely's overall sales growth in the first half of the year.

According to the data previously released by JAC, at present, the sales volume in the southwest region has already accounted for 10% of the total sales of Jianghuai and it has continued to rise. Among them, sales of SUVs and other models are leading the domestic market. According to Yan Gang, general manager of Jianghuai Automotive Passenger Vehicle Marketing Co., Ltd., the newly-listed SUV model, the Refine S5, has been listed for just five months. Sales in Chongqing's single market have reached more than 800 vehicles, ranking first in the country.

“Compared to the mature markets in the east, the western market is in the “cultivation period,” and consumers value the cost-effectiveness, which covers up the brand weaknesses of the self-owned brands to a certain extent. It also helps the self-owned and joint venture brands to “combat on the same stage” and is undoubtedly autonomous. The brand provides a 'safe harbor',” said Hui Yumei, research director of Xinhuaxin Automotive.

Consumption upgrades increase competition

Although consumers in the western market place more emphasis on “practicality” than “brands”, with the gradual upgrading of consumption in the western market and stepping-up of joint venture brands, the “westward” road of independent brands is facing challenges.

The first is consumption upgrades. “In the past, when we mentioned western markets, such as Chengdu, everyone would think of the 'Alto City,' and now the level of local entry-level models has increased significantly,” said Cui Dongshu.

“Since 2011, the consumption in the Western China market has been significantly upgraded. Before that, each month, such as Panda, BYD F0, Alto and other A00 models, the number of cards on a single month was about 5,000, and after 2011, A00 level. The number of vehicles on the model has dropped to more than 1,000 vehicles.” The relevant personage of the above-mentioned Geely Automobile stated that “At present, among Geely's full-line models, the Emgrand EC7 and the Global Hawk GX7 perform best in the western market.”

A person in charge of Jianghuai dealers in Chengdu said, “From the current sales of JAC models, the best performance is the Ruifeng S5 and Heyue models.”

According to the official guide prices issued by various manufacturers, the price of cars in the above-mentioned self-owned brand models is concentrated at 60,000 to 100,000 yuan, while the price of SUVs is concentrated at 90,000 to 140,000 yuan. In a sense, although the company achieved good sales performance in the western market, its own brand models still failed to break through the ceiling of 150,000 yuan.

Therefore, some analysts believe that with the further escalation of auto consumption in the western market and the upward movement of consumer car price ranges, independent brands must try their best to break through the current “highland” price of 150,000 yuan, otherwise they will gradually lose their initiative.

“Individual brands still have opportunities in the western market.” Hui Yumei believes that compared to the eastern market, the imbalance in the economic development of the western market is even more pronounced. Some markets in the 5-6 line and below have great consumer potential. Due to the short time of “Westward” brand, the brand is relatively limited in terms of channel and after-sale, which provides “buffer” time for the development of independent brands.

"The independent brands should use their existing reputation to accumulate, refine the market, increase channel flexibility, and consolidate this market." Hui Yumei said.

In order to further refine the market and enhance channel flexibility, Jianghuai Automobile recently stated that it will gradually change the past large-area system and establish a provincial-level marketing agency. Geely Automobile also said that in the western five-and-six-wire market, it will adopt a more flexible channel model and establish more “small and refined” terminal service networks such as 2S and 3S.

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