Half a month ago, Wuhan launched a car purchase promotion campaign that was enough to shake the car market, causing the overall car market to follow suit.

　　Reports of this subsidy have continued to mount, making Wuhan and Dongfeng enterprises the focus of media attention. Half a month after Wuhan launched a frenzy of government and enterprise subsidies, Chengdu followed closely and became the second city to launch a large-scale price war in the car market.

　　On March 17th, according to the "Chengdu Release" news, the "production and sales linkage" automobile consumption activity in Longquanyi District was officially launched from now on, with a total amount of subsidies of up to 100 million yuan. The cumulative subsidy for a single vehicle is up to 150000 yuan.

　　From the perspective of profit margin, this activity will become the most favorable car purchase activity for the people in the history of automobile promotion activities in Chengdu, with the largest discount margin, the most locally manufactured new energy brand models, and the longest duration; From the perspective of subsidies for a single vehicle model, the cumulative amount of up to 150000 yuan is also much higher than that of the Dongfeng Citroen C6.

　　Above all, the market also expects the possible impact of this "price war" in Chengdu.

　　Why Chengdu

　　As we all know, the automotive industry in Hubei has been developing for more than 50 years and has always ranked among the top in the domestic market. As the provincial capital, Wuhan is also one of the three most representative automobile bases in Hubei (Wuhan, Xiangyang, and Shiyan). Its industrial positioning and dislocation development goals are very clear, and it has formed a "automobile corridor" and related industrial clusters, which have had significant effects in this government enterprise subsidy.

　　Similar to Wuhan, as an important automotive industry base in Sichuan and even the whole country, Chengdu Economic Development Zone (Longquanyi District) has gathered 10 complete vehicle enterprises such as FAW-Volkswagen, FAW-Toyota, Dongfeng Shenlong, Volvo, Geely, and more than 500 parts enterprises. In 2022, the total vehicle output was 980000, and the automotive industry output value was 154.1 billion yuan, including 40000 new energy vehicles, a year-on-year increase of 36%.

　　Many popular models in the market, such as the Sato, Jetta series, Toyota Asian Dragon, Peugeot 5008, and Volvo XC60, are produced at their manufacturing plants in Longquanyi District. Against the background of the development of numerous brands, last year, the annual retail sales of automobiles in Chengdu Economic Development Zone (Longquanyi District) reached 10.05 billion yuan, becoming an important force in the development of local automobiles in Chengdu.

　　In order to implement the decision of the executive meeting of the State Council on increasing the support policy for automobile consumption, in accordance with the "Several Policies on Promoting the Recovery and Development of Consumption" of Sichuan Province and the requirements of the municipal party committee and government for promoting consumption, further improve the utilization rate of automobile manufacturing capacity in Chengdu, promote the transformation and upgrading of the automobile industry, and promote the recovery and potential release of automobile consumption, this promotional activity was launched.

　　If the promotion is a short-term incentive policy for automobile consumption, the General Office of the Chengdu Municipal People's Government has also recently issued the "Implementation Opinions on Promoting the Development of the New Energy Vehicle Industry in Chengdu", which has deployed 12 key tasks and a package of supporting policies and measures, indicating the direction for the long-term development of the Chengdu automobile industry.

　　Specifically, the Opinions set out several main goals:

　　By 2025, the competitiveness of the new energy vehicle industry in Chengdu will be significantly enhanced, with the industrial scale exceeding 150 billion yuan, the output reaching 250000 vehicles, and the industrial zero to zero ratio increasing to 1:1;

　　2. The utilization rate of vehicle production capacity and the local supporting rate of the enterprise have been increased to over 70% and over 50% respectively;

　　Chengdu strives to achieve 800000 new energy vehicles and 80% electrification of public sector vehicles;

　　4. Build 3000 various charging and replacement power stations and 160000 charging piles.

　　The above goals are not unreachable for Chengdu.

　　As early as this year, at the launch of the automotive intelligent system industry in the Chengdu Hi-Tech Zone, ten development plans and industrial policies for the automotive intelligent system industry in the Chengdu Hi-Tech Zone were released, and high-energy innovation platforms such as the new generation automotive intelligent terminal infrastructure platform of the National Intelligent Connected Vehicle Innovation Center were unveiled and launched. The total contracted investment for 10 key projects on the site exceeded 9 billion yuan.

　　From policy layout to investment promotion, to profit sharing and promotion, Chengdu's automobile industry has formed a healthy and long-term development pace.

　　"The price war" has just begun

　　Wuhan is just the beginning of a large-scale price reduction jointly launched by local governments and car companies. Before Wuhan, the "price war" in the automobile market had already begun. At the beginning of the year, Tesla significantly reduced its price, which was the beginning of this year's "price war" in the car market.

　　Up to now, nearly 50 automobile companies have joined the "price war". For example, on the day of the opening of the profit giving event in Chengdu, SAIC Volkswagen also entered the venue with a "sincere" official announcement of 3.7 billion yuan. The biggest discount is Huion, with a discount price of 50000 yuan.

　　SAIC Volkswagen responded by saying that the reason why brands choose to reduce prices is, on the one hand, to actively respond to national policies and the consumer environment; On the other hand, after the marketing revolution, SAIC Volkswagen has directly touched the marketing terminal and responded quickly, becoming increasingly grounded.

　　More and more car companies are joining, making the previously secretive "price war" one of the main themes of the car market this year.

　　According to the data of the Passenger Car Federation, the retail sales volume of China's passenger car market in February was 1.389 million units, up 10.3% year-on-year and 7.4% month-on-month; In January-February this year, the cumulative sales of passenger cars were 2.678 million, a year-on-year decrease of 19.8%... Even Cui Dongshu, the Secretary General of the Passenger Car Federation, bluntly stated that this year did not have the expected "good start".

　　According to changes in supply and demand, price reduction is a choice that car companies or dealers have to make.

　　In fact, since the beginning of this year, the daily discounts for various automotive brands have been far greater than in previous years, and the activities of dealers to significantly reduce profits have never stopped, even luxury brands such as Audi and Cadillac have not been spared. The reasons include not only consumers holding on to the sidelines due to the economic situation, but also the policy of halving the purchase tax on fuel vehicles last year and the national subsidy policy on new energy, which led to early consumption, leading to a decrease in sales at the initial stage of the policy.

　　Of course, it is undeniable that the wave of car price cuts set off in Wuhan has swept the country. The car market has received short-term stimulus, corporate sales have increased, dealers' inventory pressure has further decreased, and practical discounts have also been implemented in the hands of consumers. However, in the long run, a short-term consumption boost is not a long-term solution for the market.

　　Another reason for this round of "price war" is the implementation of the "Sixth National Standard B" on July 1st this year. As the implementation date of the 6th National B Standard approaches, vehicle companies are accelerating the clearance of old models through profit lending activities. This means that before July this year, the price war between car companies and dealers will become increasingly fierce, which will further aggravate the wait-and-see mood of potential consumers.

　　As industry insiders have analyzed, price wars will definitely benefit consumers to some extent. However, it should be noted that profit sharing promotion is a double-edged sword, and brand power will be difficult to maintain as prices significantly decrease. Especially, those brands and models that are already marginalized will accelerate their elimination in this "war".