Plummeting Sales by 41%!

BMW is a globally renowned luxury car brand with a relatively long history.

However, in recent years, BMW has encountered some issues in the Chinese market, with a noticeable decline in sales.

Since BMW announced its withdrawal from price wars, its sales in China have plummeted by 41%.

At this point, BMW realized that Chinese consumers are genuinely not buying BMW cars anymore.

So, what exactly is going on?

Why are BMW cars becoming less and less popular in the Chinese market now?

The decreasing popularity of BMW cars in China, even experiencing a dramatic drop in sales, is directly related to the development of China's automotive industry.

In the past, Chinese consumers would opt for overseas cars, not necessarily because the quality of foreign cars was exceptionally high, but because there were no better alternatives.

If we look back 10 or 20 years, China did have domestic cars, but they had no advantage in terms of quality or price compared to imported cars.

Up until now, many consumers still have this stereotype about Chinese domestic cars.

However, objectively speaking, in the past decade, the development of China's automotive industry has been very rapid, and at least some Chinese car companies have achieved a leapfrog in the field of new energy.

Currently, China's production and export volumes of new energy vehicles are at a world-leading level, and Chinese new energy vehicles have the following characteristics.

First, they are affordable, costing two-thirds or half the price of similar vehicles in Western countries.

Then, they are highly intelligent and modern.

Moreover, Chinese car companies have also managed to build a comprehensive service system, allowing new energy vehicle owners to enjoy better services after purchasing their cars, which ultimately leads to increasing sales of domestic cars in China.

Coupled with China's current promotion of the development of the new energy industry, the market penetration rate of new energy vehicles is already quite high.

Traditional foreign brands like BMW and Volkswagen, although they are also trying to go new energy, their products are not as competitive as similar Chinese products, so it is quite normal for Chinese consumers to prioritize domestic cars when purchasing vehicles.

In the foreseeable future, foreign cars will become increasingly unpopular in the Chinese market because the development speed of foreign new energy vehicle technology is relatively slow.

The second reason for the sharp decline in BMW's sales in the Chinese market is due to incorrect business decisions.

Starting in 2024, BMW made a decision to maintain or capture the Chinese market by initiating a price dive, reducing the prices of BMW cars in China.

The price of BMW's entry-level models was once halved, and it was possible to buy a brand new entry-level BMW for only 170,000 RMB in the market, which was unimaginable a decade ago.

In the traditional Chinese perception, BMW is synonymous with luxury cars, and only moderately wealthy families could afford to buy BMWs.

By lowering prices and engaging in intense public relations campaigns, BMW's shipments in the Chinese market showed a significant increase at the beginning of this year, with a year-on-year increase of 4.2% in the first half of 2024 in the Greater China region.

It is not easy for BMW to increase its sales volume in the face of such rapid development of domestic new energy vehicles in China, but we must see that the other consequence of price reduction sales is the reduction in profit margins.

According to the statistical data released by BMW, the profit in the Greater China region fell by 34.5% in the first half of this year and there is a trend of further decline.

That is to say, BMW's strategy of price reduction sales did not work, and it can even be said to be a loss.

Reducing profits by 34% only in exchange for a sales increase of about 4% is obviously a loss.

In this situation, BMW made an even more incorrect decision, claiming to withdraw from the price war, and then BMW's products were slightly adjusted upwards.

However, withdrawing from the price war ultimately led to a rapid decline in the sales volume of BMW's products, with a decline ratio once reaching 41%.

This situation occurred mainly because their product reputation collapsed.

The low-price sales first impacted the traditional Chinese impression that BMW is a luxury car, and some people will inevitably change their views and equate BMW cars with ordinary domestic mid-range cars.

After losing the luxury characteristics, BMW's attractiveness to Chinese consumers further declined, and even raising the price could not re-establish its image as a luxury brand car.

This image is often established over a year or even decades.

Secondly, when selling at low prices, a batch of BMW cars was processed at low prices, and now the price is suddenly increased, making consumers hesitant when buying cars.

Because whether the product is value-preserving and whether the price is stable is a key point that consumers are very likely to consider when buying a car.

Now, BMW's car products have been reduced in price and then restored to the original price within a year, which will cause consumers to be uncertain about whether the products they purchase can be value-preserving when buying BMW cars, which ultimately leads to Chinese people being unwilling to buy BMW cars.

China's advantage in new energy technology is gradually being consolidated, and even well-known American car manufacturers like Ford will consider using parts from China when developing new energy vehicles, such as batteries from CATL.

So, foreign car brands like BMW want to continue to ensure their influence in the Chinese market, the best way is to deeply integrate into China, relying on China's existing technology and complete production lines, to produce new BMW electric cars.

Because of the continuous development of the industry, China has built a relatively complete new energy vehicle design and production system, and China is rapidly moving towards the high end of the industry.

In the future of China's manufacturing industry, there will be a large number of intelligent, AI production equipment, which can effectively increase production efficiency and reduce production costs, which is also the fundamental reason why the price of China's new energy vehicles can be reduced to a lower level.

The important reason for BMW's loss of competitiveness in China is that the price is too expensive, but once it can rely on China's production line to reduce the price, then BMW's cars will have market competitiveness again.

Finally, after solidifying the Chinese market, these cars can be sold overseas, which is the model Tesla has taken.

As a native American company, Tesla built its production line in China and successfully relied on China's industry to reduce the product price, making Tesla one of the most popular electric car brands in the world today.

So we can see that Tesla pays great attention to the Chinese market.

When the typhoon attacked the southeast coastal areas of our country some time ago, Tesla's boss Musk instructed the staff of Shanghai Tesla to provide emergency rescue services for the local area.

This is obviously also taking the initiative to show good to the Chinese market, hoping that Chinese consumers will like Tesla's products more.

So although Tesla is still an American company, it has already deeply integrated with China.

This kind of industrial integration will inevitably cause some foreign car companies to change their focus.

Now some foreign companies are doing this, such as Germany's Volkswagen.

Volkswagen is currently strengthening its investment in the Chinese market, and at the same time there are news reports that Volkswagen is preparing to close its production line in Germany.

So integrating into the Chinese market is indeed a good way for many foreign companies.

But now it depends on whether BMW has the courage.

If they want to learn from Tesla and Volkswagen to change their company's industrial focus, they must be ready to be Chinese, and even change their corporate essence, which is not a choice that every company can make.

From the current predicament of BMW, it can also be intuitively felt that China's industry has indeed changed.

In the past 20 or 30 years, China's local car companies did not have the ability to compete with foreign top car companies, making products produced by Volkswagen, BMW and other companies become a symbol of high-end products in China.

In fact, overseas, BMW, Volkswagen car brands are relatively more affordable brands, which is because there is a social development gap between China and Western countries.

But now this gap is gradually being eliminated, and Chinese people no longer have to buy overseas cars at extremely high prices.

Now at the same price, domestic cars have obvious advantages in both technology content and user experience.

I also hope that China's new energy vehicle industry can develop better and better in the future.

BMW's current product sales volume in the Chinese market has indeed plummeted, even falling by 41% at one point, which is directly related to the rise of domestic car brands in China and BMW's active withdrawal from the price war.

BMW has now found that Chinese people are really unwilling to buy a large number of the company's products.

In the future, BMW can choose to preserve the Chinese market through deep Chinese reform, and use China's production system to produce better quality, cheaper products, and then sell them back to the world market.

But whether BMW has the courage is unknown.