"Now many models of BBA (Mercedes-Benz, BMW, Audi) are gradually increasing in price, and our models will also adjust prices in the future," a sales consultant at an Audi dealership in Minhang District, Shanghai, recently told a reporter from China Business News. Currently, the store is offering a promotional discount, with the Audi A7L luxury version having a limited-time offer of one month, which can save about 100,000 yuan on the selling price of 418,700 yuan. "But it is expected to increase in price next month, and both the car price and loans will be adjusted back."

While the price war in the domestic car market is still heating up, BMW has become the first to "eat the crab." In mid-July, BMW, one of the BBA brands, chose to exit the price war, and soon after, news of Mercedes-Benz and Audi following suit emerged.

Nearly two months have passed since the luxury brands withdrew from the price war. How has the market reacted? Recently, the reporter communicated with several front-line sales consultants from luxury car brands through on-site visits and online communication.

Advertisement

In addition to traditional luxury brands, the discounts for new energy luxury brands are also receding. A sales consultant at a Land Rover store in Changning District, Shanghai, told the reporter that the current price of the Land Rover Dream House model has only a limited-time discount of 30,000 yuan. "It is not very clear whether the price will rise or fall in the future, as the monthly price policy is not the same."

Luxury brands are experiencing a period of sales pain, and the development status of super luxury brands in China is also attracting attention. Not long ago, Cui Dongshu, the secretary-general of the National Passenger Car Association, wrote in an article that in the past few years, the continuous growth of imported super luxury cars has slowed down by 12% since 2023, and the decline accelerated in the first half of 2024. "The overall weakness of super luxury reflects a temporary slowdown in the purchasing power of the ultra-high-end consumer group."

Luxury car brands are raising prices against the trend.

"Now all brands can't afford to lose money and are preparing to raise prices," a sales consultant named Li Hui (pseudonym) at a Jaguar Land Rover 4S store in Pudong New District, Shanghai, told the reporter that the prices of the cars in the store will gradually increase. "The range is about 20,000-30,000 yuan." However, Li Hui did not clearly tell the reporter the time of the price increase. "It's hard to say when the price increase will happen, it could be at any time with a notice."

Li Hui further stated that the current discount strength in the store has been reduced. Taking the Defender X as an example, the discount strength for this model's loan is greater, with a financial loan discount of 180,000 yuan. However, the discount for full payment is only 90,000 yuan, and there are no other price discounts.

"The price of each car series has been adjusted, and compared to last month, the price has been slightly increased this month," a sales consultant at a Mercedes-Benz store in Shanghai also frankly stated, "The car price cannot always be adjusted downwards, the market must always maintain a good order."

A sales consultant named Zhang Nan (pseudonym) at a Maserati store in Minhang District, Shanghai, told the reporter that the Maserati Ghibli model currently has a discount of 200,000 yuan on the basis of 869,800 yuan. "Because the group has a batch of cars, the price is relatively low, and there has been no notice of a change in the Ghibli model, there is this discount before October, and it is unclear whether there will be any after that." Zhang Nan said.However, not all Maserati products have seen price reductions. Zhang Nan further stated to the reporter that the Maserati Grecale will have a pure electric version hitting the market, as the electric version is 250,000 yuan more expensive than the fuel-powered Grecale model, hence the Grecale fuel version will experience a price adjustment after the update.

Similar to LanTu Automobiles, the monthly discount situation for the new force in car manufacturing, NIO, is also quite variable. A sales consultant at a NIO store in Minhang District, Shanghai, told the reporter that the current discount for the ET7 is about 18,000 yuan, but this is the preferential price after considering the comprehensive old-for-new replacement subsidy and optional fund.

"This discount will last until the end of the month, but it varies each month," the sales consultant said. Before August 12th, NIO's preferential price was a replacement subsidy of 10,000 yuan and 20 battery swapping coupons; after August 12th, the replacement subsidy was 8,000 yuan, and the battery swapping coupons increased to 36.

Regarding the luxury car brands adjusting their "price for volume" strategy, Zhang Xiang, a visiting professor at Yellow River Science and Technology College, said: "Their starting point is good, aiming to maintain the high-end image of the brand. But in the long run, the market share of luxury cars in China is, after all, limited, and now there are already many 'competitors' in the entire market. Chinese brands have made significant progress on the road to high-end. The market share of Chinese brands in luxury cars has reached 22%, and they have already impacted the market position of BMW, Mercedes-Benz, and Audi. So in this competitive environment surrounded by strong rivals and with a fully competitive market, coupled with previous 'price for volume' measures, it will be a bit difficult for BMW, Mercedes-Benz, and Audi to do well in business without relying on price reductions."

Consumers are waiting and seeing with their money in hand.

In the view of industry insiders, the current price increase of luxury cars is hard for consumers to accept and will intensify the wait-and-see sentiment.

Zhang Xiang said: "The adjustment of prices is not arbitrarily set by dealers, but is based on a comprehensive judgment of the overall market situation. The rise and fall of prices are not a straight line, but a cyclical process that needs to be slowly accepted by consumers. A straight up and down price adjustment is definitely hard for consumers to accept."

Regarding the impact of price increases, Zhang Xiang frankly said: "Now the competition in the domestic car market is very fierce. Although there are many voices against 'involution', these all need time to correct, and consumers have been influenced by the current market environment. If we now adopt a 'volume for price' strategy to compete, that is, by reducing production capacity to reduce market supply, achieving a situation of supply not meeting demand, and thereby increasing product prices, this approach essentially cannot increase the sales volume and market share of car companies."

"The losses are all the money of the dealers, because our purchase price is fixed," Zhang Wen (a pseudonym), a sales consultant at an Audi store in Shanghai, said about the impact of price increases on sales. "Those who should buy will still buy, and when the price is low, consumers who are now hesitant will be even more hesitant."

Yan Jinghui, a member of the Expert Committee of the China Automobile Circulation Association, also told the reporter that while price wars promote the overall increase in sales, they also lead to more and more consumers waiting to buy with their money in hand. "Consumers' expectations for price reductions will be higher and higher, hoping that prices can be lower, so this leads to a certain gap between the market sales volume expected by dealers and the actual sales volume."How does the impact of luxury brands exiting price wars? Jiang Han, a senior researcher at Pangu Think Tank, said that for car companies that exit price wars, they face a typical prisoner's dilemma. If they exit the price war while other competitors continue to lower prices, it may lead to a loss of market advantage and a decline in sales. However, if all car companies continue to wage price wars, they will eventually fall into a predicament of meager profits or even losses. "To solve this problem, cost control ability has become a key factor."

Ultra-luxury brands' sales are declining in China

Similar to luxury brands, ultra-luxury brands are also increasingly difficult to do business in the Chinese market. According to data released by Cui Dongshu, from January to June 2024, Maserati's import sales were 214, 89, 129, 140, 109, and 96 units, totaling 777 units, with a cumulative growth rate of -70%; Rolls-Royce's import sales were 128, 46, 87, 57, 59, and 55 units, totaling 432 units, with a cumulative growth rate of -35%; McLaren's import sales were 3, 1, 2, 1, 2, and 1 units, totaling 10 units, with a cumulative growth rate of -92%; Aston Martin's import sales were 33, 17, 37, 18, 17, and 27 units, totaling 149 units, with a cumulative growth rate of -50%.

Regarding the brand's performance in China in the first half of the year and how to boost sales in the second half, the reporter contacted McLaren and Maserati to conduct an interview on the above issues, but as of the reporter's deadline, no response has been received.

"As a pure luxury brand, Rolls-Royce has never been and will never become a high-volume car manufacturer oriented by sales volume," a person in charge of Rolls-Royce China told the reporter. "China, as one of the markets leading the global luxury trend, is crucial to Rolls-Royce. We closely follow the trends in the Chinese market and are full of confidence in the future development of this market."

Recently, the news of "Rolls-Royce dealers reducing prices by 1.11 million" has been widely spread on the Internet. The above person in charge said: "According to our understanding, the unverified rumors recently originated from individual social media are not the behavior of the Rolls-Royce brand or authorized dealers."

Regarding the changes in the competitive pattern of luxury car brands in the Chinese market, the above person in charge further told the reporter: "As a luxury brand, the comparability of Rolls-Royce with other car brands is not high, and we will not use this to measure our brand value."

Ultra-luxury brands are also continuously increasing their layout in China, and Rolls-Royce is no exception. For example, in 2023, Rolls-Royce established its third global exclusive customization center in Shanghai, following Goodwood and Dubai. The above person in charge of Rolls-Royce said: "As an important step in the global strategy, the establishment of the Rolls-Royce Shanghai exclusive customization center is precisely to establish a closer connection and bond with the very important Chinese customers. At the same time, it helps the brand to have a deeper understanding of the unique aesthetic trends and luxury concepts of Chinese customers, bringing Chinese customers a highly personalized and more authentic Rolls-Royce Bespoke high-end customization experience."

Regarding the maintenance of relationships with customers, the person in charge said: "Our dealer partners are an indispensable and important bridge connecting the Rolls-Royce brand and outstanding customers. We always maintain close communication with our dealer partners, and through the continuous promotion of a series of measures, such as brand activities, new car experiences, training competitions, etc., we aim to cooperate more closely with our dealer partners to present the most authentic Rolls-Royce ultimate luxury experience to customers, and further deepen the connection between the brand and customers."