Original link: https://www.latepost.com/news/dj_detail?id=1662
People initially didn’t want a domestic brand sedan, especially a higher-end B-segment car. Ordinary people can’t afford it. 45 years ago, the traffic lights on the streets of Shanghai were controlled by people. A Phoenix brand bicycle was not bad, and the number of cars per thousand people was 0.5. And the very few wealthy families who can afford a car pay more attention to whether the brand is high-end enough, and whether it has face to drive out. Using this as a standard, most of them chose Volkswagen, Toyota, and Honda.
In 1985, at the first Shanghai International Auto Show, many people saw the Volkswagen Santana and Audi 100 for the first time. Auto giants such as Ford, General Motors, Nissan, and Mercedes-Benz carefully evaluated the consumption potential of the Chinese market, but the audience had the ability to take home The only thing is the manual given by the major brands for free.
Looking back, both users and self-owned brands may have underestimated the capacity and vitality of the Chinese car market. By the thirteenth time of the Shanghai International Auto Show, China has become the world’s largest automobile producer and consumer, and the sales volume of passenger cars in that year (2009) was 10.331 million.
The market expanded rapidly. However, it is still those joint venture brands at the Shanghai Auto Show in 1985 that occupy the market share of Type B cars.
These brands have entered the Chinese market for nearly 40 years. With their core technical advantages such as engines and gearboxes and their well-established brand images, they have basically monopolized the B-segment car market. The upward breakthrough of self-owned brands is almost the most difficult battle for domestic automobiles. Although breakthroughs have been made in the A-class car and SUV markets, in the fuel age, self-owned brands have not been able to really shake the monopoly of joint venture brands on B-class cars.
Until the era of new energy vehicles came, the opportunity to change lanes and overtake came. The B-segment car market, which has been monopolized by foreign car companies for nearly 40 years, finally has a Chinese independent brand break in.
The last high ground of fuel vehicles
A car can be surprisingly powerful. Making money is of course the most direct effect. As the most expensive consumer product other than real estate, betting on evergreen models can win people’s long-term generosity: In 1982, Toyota launched the first-generation Camry. 40 years after its launch, the Camry still occupies the top ten sales in the world Top list, cumulative sales of more than 23 million vehicles.
When users buy a car, the car also conveys technical standards, brand image, aesthetics and values. When Volkswagen in Wolfsburg, Germany decides to update its model, update an engine technology or exterior design, soon, consumers in an unknown town in China, Australia or South Africa will flock to the new model, starting from the 1980s The years lasted for more than 30 years. Auto products that sell well enough not only take profits and have loyal users, but also determine the criteria for judging mid-to-high-end cars, and their influence can span countries and ages.
Not all types of cars have this potential. It must have a certain price threshold. Too cheap models care more about cost performance than quality, and users will only be robbed by cheaper cars. It can’t be too small, the basis of sales and influence is the scale of users.
The common choice of global auto giants is the B-segment sedan. Targeting the mid-to-high end, able to bear the cost of maintaining technological advancement, ensuring profit margins, and at the same time valuing the long-term value of the brand, the middle class—the largest group of middle-income in every society—is the target customer.
Fighting is inevitable, and those who can’t keep up will fall behind. In the 1950s, GM and Ford, which were born in Detroit, USA, dominated nearly 70% of global car production. However, after World War II, Japanese and German car companies grew rapidly. Toyota launched the Crown (Crown) series of passenger cars, and the Volkswagen “Beetle” series achieved its 1 millionth off-line in 1955, and the right to speak began to shift.
The global oil crisis has driven the situation to change. Compared with American SUVs and pickups, people prefer cars with low fuel consumption, and a large number of mid-size cars are on the market. In the 1980s, Toyota Camry, Honda Accord, Volkswagen Passat, Nissan Teana and other models were released one after another. Auto industry reporter Bill Frasco recorded in “Once Upon a Time in Detroit” that at the 2005 North American International Auto Show, a Toyota executive commented, “Ford is a prehistoric dinosaur, relying on high-gas consumption pickups and bloated SUVs and other products, barely making ends meet.” These midsize sedans not only propelled Toyota, VW to replace GM, and Ford as the new giants, but also promised success that continues to this day.
The Chinese car market is also the cake of giants, the difference is only whether it is eaten by Japanese or German. Self-owned brands are not eligible.
“Big factories make small cars, and small factories make big cars” was the development idea of the domestic automobile industry before the 1980s. It is believed that trucks are the number one priority and that the sedan market is virtually empty. In 1987, the strategy of “cars entering the family” was determined, and Sino-foreign joint venture brands and self-owned brands were successively established. But when Toyota’s annual output reached 2.9 million, according to China Automobile News, the annual output of cars in China was only 149,000, of which less than 5,000 were sedans (including off-road vehicles).
The concept can be changed, but the technological backwardness that is 50 or 60 years late cannot be made up for in the short term. In 1985, Volkswagen entered China through a joint venture. The first model introduced by SAIC Volkswagen was the second-generation Passat. The name in China was “Santana”. It adopted the CDK (Complete Component Assembly) model, and the parts were mailed from Germany The factory is responsible for assembly.
The fledgling Chinese car industry is forced to face a huge gap. German general manager Post lamented in his memoirs: “These dusty shacks are actually a car factory? Volkswagen’s German factory can produce 1,000 cars a day in one workshop, while SAIC Volkswagen can only assemble two Santanas a day.” car.” When the first batch of domestic Santanas rolled off the assembly line, there were nearly 10,000 parts for a car, and only four parts could be made in China, tires, radios, signs and antennas.
Almost all core technologies such as engines, transmissions, chassis, and electronic controls are in the hands of foreign capital. Relying on technological advantages, the joint venture has mastered 70% of the car market, or in other words, the entire B-class car market. In this market, German, Japanese, Korean, and Chengtou Dawangqi have also changed several times, while independent brands are concentrated in mid-to-low-end models, and the label was once “low-grade, low-level, and low-priced.”
Technological superiority shapes brand image, and brand image, once established, defends itself. Cars of joint venture brands are not only sold at high prices, but are also regarded as representatives of mid-to-high end and become a kind of identity mark. In 2000, a Santana sold for nearly 170,000 yuan, and two Santanas could buy a 50-square-meter house in Beijing. Accord, Camry, Teana, Passat, Santana and other joint venture brands have almost monopolized the B sedan market for 30 years since they entered the Chinese market.
It was a long and difficult breakout. The strategy of self-owned brands is to avoid the car field where joint venture brands have advantages, and focus on cost performance. A-class below 100,000 yuan and A0 below 50,000 yuan are more popular, and the effect of low price is direct and obvious; self-owned brand SUVs of 100,000-150,000 yuan can also be cheaper than joint venture brands of the same class Tens of thousands to hundreds of thousands of yuan.
These two models have become breakthroughs for independent brands. In 2014, the market share of self-owned brands increased to 43.4%, and many self-owned brands began to have popular models.
But low prices are not the answer to all problems. Few independent brands can break into the B-segment car market and take share from joint venture brands. In this market, the joint venture’s earlier technology accumulation and superior quality control of the engine are the reasons for users to stick to it. There is also the concept that people have tacitly agreed that joint venture brands mean mid-to-high end.
Not all types of cars have loyal users and strong brand barriers. This is the most advantageous position and the last high ground for joint venture brands in China.
first crack
The attack has been going on, and the difficulty is also one of the examples of the market value of the 200,000 yuan B-class car. The reason for the late start of the era has caused difficulties: people cannot change the past history. In the era of fuel vehicles, joint venture brands are leading the way, and their technological advantages cannot be denied and difficult to surpass. But fortunately, history also provides a new opportunity. The era of new energy has arrived, and this wave is coming to everyone fairly.
In the last era, BYD witnessed the glory of the joint venture brand fuel vehicles, but also felt the pressure of competing with the giants. To kill the giants, the strategy when the strength is not equal is usually to be patient enough to accumulate core technologies, and then be agile enough to seize the opportunity.
Han DM was born under such a strategy, and its mission is to wedge itself into the B sedan market monopolized by joint venture brands. As BYD’s first medium-to-large car, its price exceeds 200,000 yuan. It uses the self-developed fourth-generation hybrid technology DM-i/DM-p, which focuses on high cost performance and high performance respectively. This is BYD’s most important weapon for attacking fuel vehicles: using plug-in hybrids to fight fuel, they think it is high-dimensional and low-dimensional.
Fuel consumption is the first indicator. Japanese cars rely on this longboard to defeat German cars, and they have been entrenched in the B sedan list all year round. However, electricity and fuel consumption are not at the same level. Soochow Securities estimates that the fuel consumption of Han DM-i is 4.2L per 100 kilometers, which is far lower than that of fuel vehicles of the same level. The fuel consumption per 100 kilometers of Accord and Camry exceeds 5L, and that of Regal, Teana, and Passat exceeds 6L. Compared with Japanese hybrid technology, DM-i hybrid achieves the lowest level of fuel consumption per 100 kilometers in the entire market at a lower cost.
When the engine becomes a power auxiliary component, it brings users lower cost of use and larger internal space. At the same price, while ensuring driving performance such as battery life and fuel consumption, new energy vehicles allocate resources to experiences such as smart cockpits and assisted driving.
Strong joint venture brands are forced to face unprecedented challenges: the technical advantages of the era of fuel vehicles are still there, but it is not important anymore, and the competition is on another track. In the new arena, batteries, motors and electronic controls are the core technologies, smart experience is a bonus item, and self-owned brands have advantages.
This means that the situation is reversed. The once indestructible brand premium of international car giants has been rapidly diluted. The representatives of mid-to-high-end brands have finally changed, and the competition in the price range of more than 200,000 is fierce, but Han has performed well. In 2022, Han will sell more than 30,000 vehicles for 4 consecutive months, and its annual sales will exceed 270,000 vehicles.
In the B sedan market, the joint venture brand has continued its monopoly position for more than 30 years, and it was the first time that it was leveraged by Han. Facing the offensive, the product competitiveness of joint venture fuel vehicles began to appear insufficient. New energy vehicles are based on EE electrical architecture, and the same model is updated almost every year, while the replacement cycle of fuel vehicles is still at 3-5 years.
Independent brands are taking the market away from joint venture drivers. According to data from the China Association of Automobile Manufacturers, in the first two months of 2023, a total of 549,000 fuel mid-size vehicles were sold, a year-on-year decrease of 26.6%. In the first quarter, BYD surpassed Volkswagen and became the No. 1 brand in the Chinese market. The chairman and CEO of Volkswagen Group (China), Bernard, used “the industry’s giant fitness center” to describe the fierce competition in China’s electric vehicle market.
The last way for the joint venture brand to win back people’s hearts and the market is to lower the price and retreat to the market within 200,000 yuan. The pace of price cuts is accompanied by the acceleration of independent brands. According to statistics from Huaxi Securities, from January to February 2023, the insurance volume of mainstream joint venture brands will drop across the board. Guangqi Honda and Dongfeng Honda will drop by 49.9%, almost cut in half. In March, the discount rate of the Honda Accord rose from 10% to 16%, and the discount rate of the Nissan Teana was 15% in March, compared with only 3% half a year ago. Neither the Passat nor the Camry can survive the price war.
Discounts are not common. An employee of an independent brand car company remembers that in the past few decades, the prices of the main models of joint venture fuel vehicles have remained firm, and prices have almost never been greatly reduced. They represent the mid-to-high end, and there is no shortage of fans, but now, they are being forced to trade price for volume.
joint venture failure
Those on the battlefield were the first to hear the gunfire. Joint venture brand car companies will soon feel more pressure, because a cannonball has just entered the B sedan market: on May 18, the Han DM-i Champion Edition was released.
“To subvert the B-class joint venture car market”, at the press conference, Lu Tian, general manager of the sales department of BYD Dynasty.com, concluded that the B car market is a battleground for military strategists and has long been monopolized by joint venture brands. Han DM-i Champion Edition Hehan DM-p God of War Edition will launch a strategic attack, aiming at the champion of B-class cars.
Only with a large enough market share can pricing be possible and subversion can be realized. In order to grab a larger market, BYD’s strategy is “same price for gasoline and electricity”. The official explanation is to buy new energy vehicles at the price of fuel vehicles. Come in.
This has been verified by the market. In February 2023, the BYD Qin PLUS DM-i Champion Edition will be launched, lowering the price of the DM-i model to less than 100,000 yuan for the first time. In March, the sales volume of this car reached 43,000 units. Jiao Liufang, manager of the Guangzhou Region in the southern theater of BYD Dynasty.com’s sales department, said that the launch of this car “breaks the monopoly of joint venture brand models for many years.”
BYD is trying to replicate this success in the B sedan market. The essence of grabbing the market is to occupy the minds of users.
After years of accumulation and price reduction measures, joint venture brands are still a role that cannot be underestimated in the B-segment car market. According to data from the Passenger Passenger Association, in March 2023, the sales ranking of B sedans will be Tesla Model 3, Honda Accord, BYD Han, Volkswagen Magotan, Toyota Camry, and Volkswagen Passat.
To break through this high ground, the first thing is to refine the requirements and break them one by one. In the price range of 150,000-200,000 yuan, there is no competitive hybrid model yet, and fuel vehicles such as Nissan Sylphy and Volkswagen Magotan are still mainstream. For this blank market, BYD chose to attack with the Han DM-i Champion Edition with a pure electric cruising range of 121km, and the starting price was as low as 189,800. While the price is falling, FSD variable damping suspension system, NFC car key, etc. are standard configurations to ensure that it is aligned with the mid-high configuration of the joint venture B sedan, and the gun is aimed at the main sales model of the fuel B sedan.
This means that after forcing the joint venture B-segment car into the market of less than 200,000 yuan, Han DM-i also followed suit, trying to further reduce the living space of the joint venture B-segment car.
It is also necessary to find the perfect balance between demand and selling price. According to market feedback, BYD chose the 200km version of the Han DM-i Champion Edition to replace the 242km version originally priced at 290,000 yuan, and meet the demand within 250,000 yuan. Its mission is to seize the high-end version of fuel mid-size cars and second-tier luxury car users. The ultimate point of this route is to become a new benchmark for mid-to-high-end models.
The task of Han DM-p Ares Edition is to meet individual needs, further enhance the brand image, and consolidate the benchmarking position. BYD defines its competitors as BMW 3 Series and some C-class models. According to the data from the Passenger Federation, from January to March 2023, the cumulative sales of Audi A6L are 39,000, Han 37,000, and BMW 3 Series 27,000.
BYD wants to use hybrids to grab the market for mid-to-high-end fuel vehicles, and BBAs are also accelerating the pace of electrification. BMW plans to launch 11 pure electric products in 2023, and Mercedes-Benz’s new pure electric architecture will be launched in 2025. Most of the large overseas car companies set 2030 as the deadline for electrification transformation.
A head-to-head confrontation is inevitable, but the most urgent battle right now is on the high ground of joint venture fuel vehicles. The Japanese, German, and American companies once fought fiercely, and then formed a relatively stable market structure. Today, the fight may be repeated, but this time, the past opponents are in the fuel vehicle camp, and the new enemy they have to face is full of ambitions. The goal is to subvert the entire B-class fuel vehicle, “not leaving a way for joint venture brands to survive.”
BYD Han DM-i Champion Edition (left), Han DM-p Ares Edition (right)
long life
Several new forces have different judgments on the final outcome of the new energy vehicle industry. Li Xiang thinks there are 5 companies, He Xiaopeng thinks it is 8 companies, and NIO President Qin Lihong is more optimistic, and the answer is more than a dozen companies. But they have a consensus that after the fierce knockout, only a few will survive.
The knockout rounds have begun. In 2023, the market environment will no longer be as forgiving as it was in 2022. The Passenger Federation predicted in May that domestic sales of new energy passenger vehicles would be 8.5 million in 2023, a year-on-year growth rate that would drop from 94% in 2022 to around 31%. The era when new energy vehicles can be manufactured and sold is over, and car companies inside and outside the sales list need to face tougher competition.
Regardless of whether BYD is included in the final game or not, car companies must admit that BYD is a terrifying opponent. In 2022, BYD will sell a total of 1.87 million vehicles, becoming the world’s largest new energy vehicle sales. Among the top ten sales of new energy vehicles in China, 6 are from BYD.
The championship is inseparable from BYD’s nearly 20 years of technology accumulation and supply chain advantages, but it is also accidental. In 2022, the domestic hybrid market will explode. BYD DM-i technology has completed four rounds of iterations, and its product lineage is complete. It is an explosive product that has robbed the fuel vehicle market. However, at that time, the industry was facing the test of lack of cores and electricity, and BYD’s vertically integrated industrial chain guaranteed production capacity and was also an important boost to sales growth.
Today capacity is no longer an issue. The challenge is whether the product itself can convince users. BYD Han is still selling well. In April 2023, the Han family sold 14,714 vehicles, winning the championship of medium and large cars. However, in the B-segment car market, the Accord with preferential subsidies has the highest sales volume, with 255.9 million units sold.
The championship version is an important way for BYD to maintain sales in 2023. Before the Han DM-i Champion Edition, based on the strategy of “same price for oil and electricity”, Qin PLUS Champion Edition, Tang DM-i Champion Edition, Han EV Champion Edition and Seal Champion Edition have been launched, driving BYD to maintain a high growth rate in 2023 . According to BYD’s announcement, as of April, its cumulative sales in 2023 will be 762,400 vehicles, a year-on-year increase of 94.3%, far exceeding the market.
Short-term stimulation of sales is not the purpose. After subverting the joint venture B-class fuel vehicles, BYD’s longer-term plan for the Han DM-i Champion Edition is to become an evergreen IP. Like the rivals Passat and Camry it wants to subvert, it has long-lasting vitality and shows its influence across countries and ages.
Even for BYD, the world’s largest new energy sales company, this is not an easy task. Unlike short-term hits, in order to become a “century-old store”, the product needs to maintain advanced technology and experience, and it needs to have a long board that is far superior to similar products, and there must be no obvious short board. It requires a high degree of unity in technology, brand, marketing, and service. The most important thing is that these requirements need to be met all the time in a cycle of decades or hundreds of years.
No Chinese auto company has done this yet. Since the first joint venture car rolled off the assembly line in the Chinese factory in the 1980s, in the past few decades, the old master who used a hammer to beat the car body in the workshop may have the same wish as the current new energy car companies, hoping to have their own brand It can replace the joint venture brand and truly become a representative of mid-to-high end. For self-owned brands, Han DM-i Champion Edition may be a precious sample to challenge fuel B-class vehicles.
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