Price fluctuation in the market is difficult to price Alternative-energy car companies confront subsidy retreat

Subsidy New Deal launched, Weilai launched the last 4-hour insurance plan (as of March 27, 0:00), now pay a maximum of 50,000 savings in cash. On March 26th, at 8 pm, Weilai Automobile launched its "4-hour price-protection plan", a vivid illustration of the impact of the recession in subsidies on the prices of new-energy vehicles: consumers may have to pay more for the same new-energy vehicle. This effect is more direct in Weilai's pricing strategy for the next three months. Take Weilai ES8 with a starting price of RMB 448,000 Yuan as an example. According to the 2018 subsidy standard (RMB 45,000 Yuan for the State and RMB 22,500 Yuan for the Land), the final price for consumers to buy a car is RMB 380,500 Yuan for those who pay a fixed amount of money on or before March 26. Users who pay by March 27-31 and sign up before April 30 will be paid RMB 389,500 yuan according to the 2018 standard and the transitional plan. Users who pay after April 1 are required to pay 407,500 yuan according to the transition period subsidy standard. After the transition period ends on June 25, the price to be paid is as high as 430,000 yuan. On March 26, the long-awaited subsidy adjustment policy in the industry was officially launched, and the prices of new energy vehicles will fluctuate accordingly. According to Cui Dongshu, secretary-general of the All-China Federation of Travelers, the New Deal sets a three-month transitional period to allow car companies to rationalise the layout and timing of new products while avoiding a sharp dive in production and sales figures. However, it is also possible that the transitional period will lead to difficulties in pricing by car companies, Price fluctuations and other adverse performance. As subsidies recede, car companies struggle with how they should set prices for new-energy vehicles. If the price rises, it is bound to be unfavorable to sales, and if the price of a car fluctuates frequently, it will also have an impact on the brand; If the original price is maintained, profits will be sacrificed, or even "lose money and earn shouts". Strangely enough, the recession in subsidies has spawned a wave of promotions. In order to reduce the impact of the decline in subsidies on sales, some car companies choose to fill the price gap themselves, pre-emptive pressure on competitors. GAC New Energy announced on the evening of March 26 that the following models of GAC New Energy will be purchased from now on: GE3530 will be ordered, 66,000 yuan will be paid by GAC + 24,700 yuan will be paid by GAC, with a total subsidy of 90,700 yuan; For subscribing to GS4 PHEV, Xiang Guo Bu 22,000 yuan plus Di Bu 11,000 yuan, totaling 33,000 yuan. According to the latest national new energy subsidy policy in 2019, the GE3530 pure electric vehicle will receive a subsidy of about 54,000 yuan during the transition period, which means that Guangzhou Automotive New Energy will need to fill the price gap of 36,000 yuan. After the transition period, the subsidy will only be 25,000 yuan, which is 65,700 yuan less than last year's subsidy. Obviously, this is far beyond the profit margin of the bicycle. Generally speaking, the profit of self-owned brand bicycle is generally less than 10,000 yuan. This means that for every GE3 530 sold, GAC New Energy may have to "upside down" more than 50,000 yuan. Guangzhou Automotive New Energy started relatively late. If these are the two models, and sales are not high. If through this round of subsidies to recede their own price difference to make up for the price advantage, can hit the market visibility, enhance the market share. Some people in the industry said. In the first two months of this year, GAC sold 2,776 new cars, up 75.7 per cent from a year earlier, but with a market share of only 1.9 per cent, according to the Federation of Chinese Automobile Manufacturers. Apparently, Guangzhou Automobile New Energy has an urgent demand for market share. For the back of Guangzhou Automobile Group Guangzhou Automotive New Energy, there is sufficient financial support. But not every car company has the strength to fill all the price gaps. Weilai phased pricing strategy is to reduce the price promotion at the same time to reduce operating pressure, through the insurance strategy to avoid risk. Similarly, another head builder, Vema Motor Co., is insuring its price. As early as the beginning of the year, Weimar warned against the decline of subsidies, and announced that from 0:00 a.m. on January 1, 2019 to 24:00 a.m. on March 31, 2019, if the decrease in land subsidy exceeds 10,000 yuan in 2019, Weimar will subsidize the part exceeding 10,000 yuan for those customers who have completed the payment of Weimar Motor Vehicle. If the decrease is not more than RMB 10,000 yuan, the purchase price will be calculated according to the land supplement policy in 2019. On March 27th Mr Weimar told reporters that the strategy would continue until the end of the month. However, it is not a long-term solution for auto companies to fill the price gap by themselves. "It is difficult for car companies to fill the gap all the time, but if prices adjust frequently, consumers will not pay for commodities with unstable prices." An insider in the automobile industry told reporters. In addition, from the enterprise Operating conditions for low-volume car companies, choose to fill the price differential pressure will be less, but higher sales of new energy vehicles companies are now generally wait-and-see attitude. March 27, BAIC new energy-related sources told reporters that the implementation of the new policy early, will bring certain or even greater pressure on enterprises, do not rule out price adjustments. BYD stressed to reporters its technological and cost advantages, saying it was ready to adapt, but did not mention the impact of the subsidy recession on prices. Geely said that there is no response to this matter. Need to buy a new energy car as soon as possible? "As subsidies recede, the price of new-energy vehicles is likely to rise. Without it, companies will have to survive on their own, but this'upside-down 'won't last long." Cui Dongshu said. Take several popular models on the market for example. The subsidized Beijing Automotive New Energy EU5 R550 Smart Link, currently priced at 161,900 yuan, the Gilead EV450 Premium, 155,800 yuan, and the SAIC Roewe iE5 Zhaopin Premium, 158,800 yuan, all receive a maximum subsidy of 90,800 yuan under the 2018 subsidy standard, while the subsidy under the new subsidy standard will be reduced to 22,500 yuan. If car companies do not fill the gap, car prices will rise 68,000 yuan, and even if the car companies subsidized part of the difference, it is likely from about 150,000 yuan into the price range of more than 200,000. As subsidies recede, new-energy vehicles may be priced differently in phases, but rising prices are an overall trend. But since there's no new way Source car subsidies, subsidies recession will not affect the price of Tesla. After the New Deal, in the car sales circle caused strong repercussions. "Now is the best time to buy a new energy car, some companies have not yet implemented the new policy to 4S stores, can also follow the 2018 subsidy standard operation. Not to buy now, soon to rise in price." A salesman for new energy vehicles told reporters. Cui Dongshu believes that the June 25 subsidies transition period before the end of the new energy vehicle market is expected to usher in a wave of small climax. "For example, if consumers in Beijing shake their licence plates for renewable energy vehicles, they have valuable indicators that expire if they don't buy them. In this case, it's definitely best to buy a car before June, not before December." Cui Dongshu told reporters. However, there are also industry insiders believe that the new energy subsidies decline at the same time, the new car endurance, the level of intelligence will also be improved. Although the New Deal, prices will rise, but the same product will be upgraded, not necessarily lower cost performance. "Weimar will switch to model year very soon, which will further enhance its competitiveness in terms of intelligence. The policy subsidy standard is an important reference factor for car companies when they launch a product, but it is not a decisive factor. It is more focused on how to adequately meet the diverse needs of different users." Weimar Vice President Lu Bin told reporters.