Luxury Cars Compete In The First Half: First Tier Brands Accelerate Layout, Second Tier Brands Survive

In the first half of the year, the automobile industry association of China released its production and sales data for the first half of July. Although automobile production and sales showed a recovery growth in May and June this year, affected by the new crown pneumonia epidemic, the automobile production and sales in the first half of this year were 10.012 million and 10.257 million respectively, down 16.8% and 16.9% year-on-year.

Compared with the first half of this year, the overall impact of the epidemic situation on the automobile market has further increased.

According to the data of the Travel Association, in June this year, the retail sales of luxury cars increased by 27% year-on-year and 9% month on month. The market share reached a record high of 14.9%, far exceeding the overall market growth.

"The process of luxury brand upgrading is not a typical process of brand upgrading. The rapid recovery of high-end exchange demand for consumption upgrading determines the adverse rise of this round of luxury car market. " Cui Dongshu, Secretary General of the Travel Association, analyzed and pointed out that "although the demand characteristics of the car market are still dominated by the first purchase, the exchange purchase proportion is still rising. On the other hand, the epidemic situation has made luxury car consumers pay more attention to health and quality of life, thus stimulating their demand for luxury car replacement."

Compared with the 25% - 30% market share of luxury brands in developed countries, China's luxury car market still has a lot of room for improvement, and the potential opportunities and space also give luxury brands unlimited development possibilities.

However, it is not difficult to find out from the sales data of luxury brands in the first half of the year recently that the differentiation of luxury car market is further intensified. Resources and market share are further concentrated with first-line luxury brands such as Mercedes Benz, BMW and Audi; competition among second-line luxury brands, such as Lexus, Cadillac, Volvo, Jaguar Land Rover and Lincoln, has become increasingly fierce. The entry of pure electric brand Tesla has constantly stirred the market wind of luxury brands.

First line brand: accelerate localization and sink layout

The declining auto market intensifies the Matthew effect, and also allows Mercedes Benz, BMW and Audi to continue to expand their advantages.

In terms of sales volume in the first half of the year, Mercedes Benz temporarily took the lead with a sales volume of 346000 vehicles, a slight increase of 0.4% year-on-year, and it was also the only luxury brand to achieve positive year-on-year growth; BMW (including mini) followed closely, achieving 329000 new car sales in the first half of the year; Audi was temporarily ranked third with a sales volume of 302 000 vehicles.

The outbreak of the epidemic slowed down the growth of the automobile market in the first half of the year. However, a recent visit to a number of luxury 4S stores in Beijing found that the passenger flow and turnover have basically recovered. In terms of price, although some terminal prices of Benz, BMW and Audi have been given certain discounts, the discount is not strong enough.

Among them, the new Audi A4L discount range is 60000-70000 yuan, Mercedes Benz C-class car discount is about 40000 yuan, BMW 5-series terminal price is the highest discount of 60000.

"The 5-series models have always been selling well, and the discount rates of the two power versions are different. High configuration models can basically get 50000-60000 discount, but there is no replacement subsidy." On the 11th, a salesman of a BMW 4S shop interviewed by the reporter said that compared with the preferential prices in previous years, now is a good time to start.

However, the first half of the second half of the luxury car market has not yet begun to compete.

It is understood that the new high-end vehicles such as the gre-n and Mercedes Benz will be launched in the second half of the year, and the new models such as the gre-a and Mercedes Benz will also be launched in the second half of the year.

Of course, for Mercedes Benz, BMW and Audi, the competition is not just about the current sales data and the status of the market.

In fact, every important step in the global luxury car manufacturers' future oriented strategic layout is closely related to China. The impact of the epidemic did not stop the localization process of Mercedes Benz, BMW and Audi.

On May 28, Audi's parent company, Volkswagen, announced that it would acquire 26.47% of the shares of GuoXuan high tech, a domestic battery manufacturer, and became the largest shareholder of GuoXuan high tech. on June 3, BMW signed a contract with State Grid Electric Vehicle Company to promote the production, use and recovery of electric vehicles, and use clean energy in the whole life cycle, and strive to realize the win-win and mutual benefit of "vehicle pile power grid user society". On July 3, BMW signed a contract with State Grid Electric Vehicle Company In cooperation with Alibaba, Alibaba founded the "Alibaba cloud Innovation Center BMW start-up garage joint innovation base" to create an innovation incubation ecosystem in the field of "Internet + automobile"; on the same day, Mercedes Benz also announced that it would invest 900 million yuan in Funeng technology, a Chinese power battery manufacturer, and hold 3% of the shares.

At the same time, BBA is also accelerating market penetration, shifting the focus of network development to the third, fourth tier and western cities, and reaping the future emerging markets with its rich network layout and higher brand awareness.

According to the data of China Automobile Circulation Association, in the first five months of this year, 90 new 4S stores were added to luxury brand dealers, accounting for 21.1% in first tier cities, 22.0% in second tier cities, 24.4% in third tier cities and 21.1% in fourth tier cities. In terms of the number of new outlets, Audi and Mercedes Benz took the top three.

"Speeding up the layout of China's automobile market not only reflects the importance of luxury brands on China's automobile market, but also helps to avoid market risks and reap the development dividend of China's automobile market." An industry expert who has long studied the luxury car market said.

Second tier brands: price war under "survival between cracks"

In contrast to the performance of first-line luxury brands such as Mercedes Benz, BMW and Audi in the first half of the year, the development space of traditional second-line luxury brands such as Lexus, Cadillac, Volvo, Jaguar Land Rover and Lincoln was further squeezed, and the gap between second-line luxury brands and BBA was further widened.

According to the data released so far, Lexus, which has the strongest performance, sold 22000 new cars in May, a year-on-year increase of 35.1%; from January to may, the cumulative sales volume was 73000, which was slightly reduced by 3000 compared with 76000 vehicles in the same period of last year. As long as it can continue its sales in May, Lexus will surpass Cadillac's 87000 vehicles in the first half of the year, taking the first place in the second-line luxury brand list.

Volvo, which followed closely, sold 65600 vehicles in the first half of the year. Lincoln, relying on domestic adventurers, also achieved 22000 sales in the first half of the year.

However, as the "leader" in the sales volume of the second-line luxury car camp, Jaguar Land Rover did not announce the sales volume in the first half of the year. According to the statistics of the Travel Association, in May 2020, Chery Jaguar Land Rover sold 5835 vehicles, including 3720 Land Rover brands and 2115 Jaguar vehicles.

Recently, a 5.1% discount sales information of all models released by the official Jaguar also partly reflects the current survival situation of Jaguar Land Rover, and has opened the price war of second-line luxury brands to "trade for quantity" in the second half of the year.

According to the information, in Shanghai, before July 31, the sales of all series of i-pace models will be reduced by 5.1%. This price reduction is the first time for luxury brand discount in China's auto market. In fact, it is not news that the second-line luxury brands are at a big discount in the Chinese market. In recent years, in addition to Lexus, where prices have been firm and even some models have increased, it is normal for other second-line luxury brands, such as Cadillac, Land Rover and Volvo, to trade in volume at price.

In the industry's view, the second-line luxury brands hold high and hit low. Behind the price reduction is the weak sales growth and the market space is occupied.

The biggest pressure comes from Mercedes Benz, BMW and Audi. For a long time, the gap between luxury brands and second-line brands is hard to overcome. On the other hand, in recent years, even Mercedes Benz, BMW and Audi are constantly lowering the price of entry-level products in order to improve sales volume and market share. It is understood that the 2019 gla 200, the entry-level model of Mercedes Benz GLA, has dropped from 264800 yuan to 184500 yuan this year.

Secondly, the joint venture brands of high-end models have been launched to cover the mainstream consumer groups with price advantage and try to get a share of the luxury car market.

"Excessive pursuit of sales volume and sharp price reduction is not a rational choice for brands. On the one hand, price reduction brings profit reduction and poor sustainability; in addition, the decline of brand power caused by price reduction is irreparable." The experts said.

"The popularity of second-line luxury brands is not as good as that of first-line brands. At present, the most important thing to do is to improve the brand value."

In view of how to develop the second-line luxury brands in the future, the above-mentioned experts finally pointed out that with the improvement of the epidemic situation and the upgrading of consumption, there is still room for growth and development of China's luxury brand market. However, it is not a way out to blindly trade in quantity with price. Only by doing a good job in brand building, making clear the development route and differentiated layout is the key to breaking the situation.