More Than 20 Carmakers in China Discount Over 70 Models for New Year

(Yicai) Jan. 12 -- The new year has started with a round of price cuts in the Chinese auto market, with more than 20 carmakers launching various limited-time discounts on over 70 models.BMW Group took the lead and cut the price of 31 models in China on New Year's Day, while Tesla's country arm offered buyers ultra-low interest rates or even interest-free plans.The promotional campaigns are quite diverse, with some carmakers directly providing cash subsidies, others adopting "fixed-price" car sales, and third offering three- or five-year interest-free car loan benefits to buyers, Yicai found.BMW's substantial price cuts were not an attempt to trigger a price war, but mainly to help ease the cash flow pressure on dealers, Li Yanwei, a member of the China Automobile Dealers Association's expert committee, told Yicai.Joint venture carmakers, local and foreign manufacturers' brands in China have also followed suit to launch various limited-time offers for fuel and new energy vehicle models. For example, FAW Toyota discounted the Prado by as much as CNY50,000 (USD6,900), while Tesla China launched "seven-year ultra-low interest rate" or "five-year zero-interest" car purchase plans.Most JV automakers offer direct cash discounts with relatively large reduction margins, while the local brands have made more restrained efforts, mostly using additional manufacturer subsidies, interest-free loans, and commitments, among other strategies, to cover the extra 5 percent vehicle purchase tax that consumers should otherwise bear after the beginning of the new year..China adjusted its NEV purchase tax policy on Jan. 1, The new policy has shifted from the previous full exemption to a 50-percent reduction, which results in a 5 percent tax rate for NEV buyers, with the maximum reduction per vehicle set at CNY15,000 (USD2,070).The launch of new models after the New Year is another reason why carmakers are competing with promotions, aiming to reduce existing inventory. Salespeople from Xpeng Motors and BYD said to Yicai that before releasing new cars, stores will offer discounts aimed at clearing inventory as soon as possible to welcome new models.Most of the new models launched after the New Year adopt the competitive strategy of "more features at the same price," the salespeople noted. For example, Xpeng released four new cars last week, all equipped with its second-generation Vision-Language-Action technology that makes them a smart ally that "understands the world and responds like a human being, but its unchanged price from the year-earlier models increased the pressure to sell older models at lower prices."Competition in China's auto market will only get more intense throughout this year, not easier," said a marketing executive from a traditional carmaker.Editors: Tang Shihua, Martin Kadiev