Fukutaro Yamashita
| Japan News
Beijing — Companies participating in the 2024 Beijing International Automotive Exhibition are emphasizing discounts and cheap prices. Japanese automakers are struggling with a price war that has been exacerbated by the overproduction of electric and other vehicles as well as the real estate recession in China.
When the world’s leading auto show opened on Thursday, Honda Motor Co. launched its new EV model — the e:NP2 — in China. At the exhibition venue, a senior official of a joint venture company announced the vehicle was priced at 189,800 yuan (approx. 4.1 million yen). The official then said that there would be a 30,000 yuan discount for the time being, which triggered applause from the audience of several hundred people. Lowering the price of a new model at the time of its launch is unusual even in China.
Compared to the previous model that was launched two years ago, the range of the new model is 7% greater and it is equipped with better IT functions. Even still, the company lowered its price. An official explained, “Setting the price was quite tough but the company has no choice but to start by offering a discount to catch customers’ attention.”
Lei Jun, the chief executive officer of major smartphone company Xiaomi, which has recently entered the EV market, proudly announced Thursday that the company has received more than 75,000 orders. Xiaomi’s first EV model — the SU7 — which was launched at the end of March, is priced at 215,900 yuan (approx. 4.7 million yen). While it is said that the company will lose money on each unit it sells, it is expected to prioritize expanding its market share over profits for the time being.
US EV manufacturer Tesla and China’s largest EV company BYD further lowered prices of their vehicles to meet with such companies.
This year’s exhibition is the first since 2020, as it had been canceled during the COVID-19 pandemic. At this year’s event, 278 new energy vehicles including EVs are on display, up 70% from the 160 displayed four years ago. According to Chinese media, the Chinese EV market is immersed in a fierce price war and the scale of price cuts in the first quarter of 2024 reached the same level as the entirety of 2022.
Behind this situation is the increasing imbalance between production and sales. Automobile production in China reached 30.16 million units in 2023, up 11.6% from the previous year.
On the other hand, the real estate recession has been lengthy and the government’s subsidies for new energy vehicles ended at the end of 2022. The demand for automobiles in China peaked at 29.12 million units in 2017 and stood at 25.98 million units in 2023. Oversupply makes it difficult to sell vehicles without large discounts.
China’s auto exports in 2023 amounted to 4.91 million units, making it the world’s largest automobile exporter – overtaking Japan. This is possibly because China exports automobiles that failed to sell domestically.
Over the three years of the COVID-19 pandemic, Japanese automakers fell far behind in terms of the electrification of vehicles and the use of IT, both of which progressed rapidly in China. Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. all saw year-on-year sales decline in China, ranging from 1.7% to 16.1%. These companies are struggling to make up for the delay and are taking such measures as increasing the lineup of new energy vehicles and signing business partnerships with major tech companies such as Tencent and Baidu.
Mazda Motor Corp. President Masahiro Moro showed a cautious attitude over joining the price war, saying, “The entry of many start-up manufacturers (into the EV market) has led to a collapse in prices. However, I believe prices will settle out to sustainable levels in the medium term.”
