BMW was the first to withdraw from the price war in China's car market, scaling back incentives, with Mercedes-Benz and Audi following suit.
German luxury carmakers are withdrawing from the price war in the Chinese market, significantly scaling back car-buying incentives in a bid to reduce the losses faced by dealers.
BMW has withdrawn from the price war in the Chinese auto market, raising the prices of its entire lineup by at least RMB 30,000 yuan ($4,140), the Securities Times said in a report yesterday.
Prices of the entire BMW lineup have now been raised, with increases ranging from RMB 30,000 to RMB 50,000, the report said, citing a salesperson at a BMW dealership store in Beijing.
The previous sharp price cuts have led to widespread losses for dealers, the salesperson said.
The current Chinese auto market competition is exceptionally fierce, and in the second half of the year, BMW in China will focus on the quality of its business and support the stable development of its dealers, the report said, citing BMW's response.
In early June, BMW became a hot topic of discussion due to significant discounts offered on battery electric vehicle (BEV) models, including the i3 and i5, with the i3's discounted price as low as about RMB 170,000 at some dealer stores in Beijing, Shanghai and Guangzhou, the report noted.
Information on BMW China's website shows that the i3 is currently offered in three variants with official starting prices of RMB 353,900, RMB 383,900, and RMB 413,900, respectively.
Under the influence of the price war, the three German luxury brands -- BMW, Mercedes-Benz and Audi -- are expected to lose about 500,000 units of sales in the Chinese market for the whole year of 2024, the Securities Times said, citing a person with knowledge of the matter.
BMW's price-cutting strategy in China did not lead to sales growth, but would instead dilute its brand, the report said, citing several industry sources.
BMW is not alone, Mercedes-Benz and Audi are also following suit to reduce discounts.
Not only BMW, the exit from the price war has become a common move for traditional tier-1 luxury carmakers including Mercedes-Benz and Audi, another local media outlet, Cailian, reported yesterday, saying its journalists visited dealership stores on July 15-16.
Prices of all BMW models have now gone up compared to the highest discounts offered at the end of June, the report quoted a BMW dealership store salesperson as saying.
“We have noticed the news of BMW's exit from the price war and Mercedes-Benz will surely follow suit,” Cailian quoted a Mercedes-Benz dealer store salesperson as saying.
Many of Mercedes-Benz's models are currently being sold at a loss, with the Mercedes-Benz C-Class, for example, bringing in a loss of RMB 70,000 per unit sold, which is not a sustainable business state, the salesperson said.
Mercedes won't issue an official notice like its peers, but prices could go up at any time, Cailian quoted another sales consultant as saying.
Audi has already made small price increases on its main-selling models, including the Q5L, A6L and A4L, and may continue to do so next, but not by much, the report said, citing an Audi dealer in Beijing.
($1 = RMB 7.2534)
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