Chongqing - China has witnessed a large-scale of auto price reduction this March. Starting from Dongfeng Motor, a number of automakers announced to cut prices of their automobiles with unprecedented discounts. 

At the beginning of March, Dongfeng Motor, one of China’s significant automakers in Hubei province, first kicked off the price cut with a Citroen C6 priced at 211,900 yuan (about 30,816 U.S. dollars) can be purchased at only 121,900 yuan now.

Other fuel vehicle brands joined to offer subsidies or cut prices of their automobiles, with enormous scope and discount.

Fuel vehicles may encounter a living crisis

Statistics show that, for the first two months, the sales of Chinese passenger vehicles were 2.679 million units, with a decrease of 19.8% year-on-year, while the NEVs reached 439,000 units, with an increase of 61% year-on-year and 32.8% month-to-month.

“From the statistics, we can conclude two reasons for the price cuts,” said a representative in charge of sales from a Chongqing mainstream automaker, “For one thing, there is a weak demand in the market; For another, the NEV seizes more market shares than the fuel vehicles.”

The rising NEV market has threatened traditional fuel vehicles' market shares in recent years. Over 30% of customers choose to buy NEVs, leading to an unsalable situation for fuel vehicles.

As observed by industry insiders, while the price cuts are happening in partial markets, customers, in most cases, will keep a wait-and-see attitude.  

“A brand with unexpected price cut will make other brands encounter mass pressures on pricing,” said Chen Xueqin, the executive vice president of Chongqing Automobile Business Association. “Under this situation, customers expect an ongoing price cut, which may lead to decreasing sales.

With the coming State VI B emission standards, the cost of fuel vehicles will further increase, reducing product competitiveness. In 2025, with the implementation of State VII emission standards, mainstream fuel vehicles may encounter a living crisis.

“It is obvious that NEVs will substitute fuel vehicles,” said Qu Yunchao, a market observer. He thinks the price cut this time is just the start of the industry shock.

In January, the board chairman of Changan Automobile, Zhu Huarong, predicted at the 2023 Changan Automobile Global Partner Conference that in future three to five years, 60%-70% of auto brands would be closed, suspended, merged, or changed the line of production.

Chongqing is well prepared for the industry upgrade

As one of China’s significant auto manufacturer clusters, Chongqing is well prepared to cope with the industry upgrade.

In recent years, Chongqing automakers have kept upgrading their product competitiveness using accelerating steps forward to NEV. All the mainstream automakers have found their own ways and orientations for developing NEV.

On March 8, Changan Automobile reported sales statistics for February, with 189,505 units produced, up 44.82% year-on-year. The NEV sales of self-owned brands reach 20,574 units, up 103.38%.

The NEV automaker Seres reached sales of 6577 units in February, up 104% year-on-year. The brand debuted its new model SERES 5, at Brussels Auto Show in January, which has signed cooperation contracts with over 20 overseas partners, receiving orders of over 20,000 units.

Another NEV brand Livan Auto, focusing on battery-swapping technology, has constructed over 200 battery-swapping stations in 24 cities. As planned, in 2025, the stations will be increased to 5,000. Remarkably, it only needs 60 seconds to swap batteries in the station.

As introduced by a related person from Chongqing Municipal Economic and Information Commission, Chongqing’s mainstream automakers behave better in the NEV market. By virtue of advanced high-tech products, they keep rapid development in the NEV field.