Volkswagen escalates China’s EV price war with discounts of over US$5,000 aimed at budget-conscious drivers
- VW’s price cuts suggest that competition is getting fiercer, analyst says
- Carmaker’s two ventures are offering discounts of up to 20 per cent on battery-powered SUVs
The carmaker’s two ventures in China, FAW-Volkswagen and SAIC-Volkswagen, are offering discounts of up to 20 per cent, or 40,000 yuan (US$5,816), on battery-powered sport-utility vehicles (SUVs) in the hope of luring more budget-conscious drivers. FAW-Volkswagen is also offering buyers a free camping kit worth 4,900 yuan.
“Price reductions are being widely reported across the mainland’s automotive industry because of a sharp drop in sales,” said Eric Han, a senior manager at Suolei, an advisory firm in Shanghai. “VW’s price cuts are a sign that competition is getting fiercer.”
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Sales of FAW-Volkswagen’s EVs in the first two months of 2023 dropped 8.3 per cent from a year earlier to 9,572 units, according to the CPCA. The joint venture reported sales of 221,946 vehicles – both petrol cars and EVs – in the same period, which represent a decline of 24.9 per cent year on year.
Sales numbers for SAIC-Volkswagen EVs for this period were not available, but the joint venture said sales of all vehicles in this period fell 29 per cent from a year ago to 154,631 units.
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More than 30 carmakers have engaged in the price war since the beginning of the year, according to state-owned Securities Times.
Tesla’s Gigafactory in Shanghai led with the price cuts starting in late October, followed by another round of discounts in early January. The two rounds of cuts have brought prices of Tesla’s Shanghai-made Model 3s and Model Ys to their lowest levels since the first cars rolled off the Shanghai production line in December 2019.
With discounts from dealers and the manufacturer, buyers of BMW’s i3 EV in China can save as much as 100,000 yuan, or about 30 per cent of its price tag of 353,900 yuan.
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BYD, mainland China’s largest EV builder, is offering discounts of up to 20,000 yuan on its Dynasty series this month. Consumers who buy BYD’s Seal EV, originally priced at 212,800 yuan, can receive an 8,888 yuan subsidy and an additional 2,500 yuan cash award for switching from petrol cars to EVs.
Some local governments are also taking steps to generate big-ticket spending by offering subsidies for new car purchases.
Authorities in China’s central Hubei province are offering discounts of as much as 90,000 yuan on cars bought from Dongfeng Honda Automobile, according to promotional leaflets at car dealerships. A 4,000 to 90,000 yuan rebate will also apply to models produced by another Dongfeng Motor joint venture.
The governments of Jilin province in northeastern China and Guangdong province in southern China are also giving out cash subsidies to car buyers to bolster vehicle sales.
