Is BYD breaking the rules of the game?

After the Spring Festival in 2011, BYD pushed down the first price domino this year and announced that it had significantly reduced the prices of the five main models with the largest sales, with a maximum drop of 15,000 yuan, which was an uproar for the industry.

The reason why it is "beautiful" is that the most important thing is to reduce the price. BYD announced that the price of the models, in addition to F6's high-end products more than 100,000 yuan, the rest of the models are in the 30,000-60,000 yuan range, which means that the price concessions to the entire vehicle price of more than 20%, The real car sold cabbage prices, which is undoubtedly a huge temptation and lethality for self-owned car consumers whose prices are the first element of purchase.

On the other hand, the industry’s response to BYD’s price cuts is large. Many autonomous car companies believe that BYD’s practices have undermined the rules of the game that have not been formed by price wars as the most important means of competition in recent years. BYD’s practice of seizing market share through price is In encouraging self-owned car enterprises to abandon the strategy of establishing enterprises and sacrificing the long-term development strategy of independent brands, they are turning into a vicious cycle dominated by price competition.

It is undeniable that BYD’s heavy price will certainly have a huge impact on this year's small-car market. Although some of its own-brand auto companies stated last week that they would not follow up on BYD’s price action, it is believed that this is only official. The rhetoric. Whether it is a manufacturer's behavior or a dealer's behavior, it can be sure that there will be different levels and forms of follow-up in the future, and the price war has begun.

From an objective point of view, BYD's price cuts are still expected, that is, BYD is more from its own business development needs, rather than "cut prices for price cuts." Last year, BYD completed sales of 520,000 vehicles, which did not reach the target of 600,000 after the mid-year reduction, and some dealers withdrew from the network. It can be said that through the price reduction under the support of manufacturers, it can better instigate dealers to actively face changes in the market, and it can also take the initiative in this year's sales competition.

Compared with other autonomous car companies, BYD has more capital that can use price means to gain market share. On the one hand, BYD's profits in the battery industry can provide cash flow for such large-scale market operations. On the other hand, BYD, which is still focused on domestic market development, does not need to use more resources to expand overseas markets. While Geely, Chery, and Great Wall, on the one hand, most of the profit comes from car sales, on the other hand, the merger of overseas car companies and the development of overseas markets will affect the ratio of resources to the domestic market. The so-called "seeing food and eating" has only such a big appetite. It can only be awkward to want to conduct a large-scale price action.

The most important thing is that this year, a series of “autonomous departments” such as Guangqi Honda, GAC Autonomous, Dongfeng Fengshen and SAIC-GM-Wuling will all have a large amount of products and production capacity on the market. These products are not weaker than traditional products in terms of both product and marketing capabilities. The entry of self-owned brands will greatly raise the threshold of competition in the entire low-end auto market. Pre-emptive strikes may not guarantee the desired goal, but it is even more difficult to change or influence the old market structure. That is, whether or not you can "prepare people" for the time being, but it must be "starting."