Faced with a demand crisis that was already brewing in 2023, car manufacturers are emerging from the post-Covid golden age and must fight with discounts… or free equipment, including on luxury and high-end models.
The kick in the anthill is called “Tesla”. But coming from a car manufacturer that did not exist in the recent past and that does not necessarily have the “codes” of the sector, what could be more surprising? The American giant was indeed one of the first to significantly vary the price of its cars. One time with a spectacular increase, the next day with an equally significant decrease. A permanent “yo-yo” that had also caused some tension among Model 3 customers in second-hand.
While residual value did not seem to be a major concern for Tesla, this is far from being the case for so-called “historical” manufacturers, which depend much more on fleets and companies than Tesla, whose sales mix is logically B2C-oriented.. And if Tesla can afford to upset a few individuals, you won’t see Audi, Volvo or Lexus having fun slashing prices as soon as the order book starts to show a few blank pages. Upsetting individuals is one thing, alienating B2B is quite another matter.
But that doesn’t mean that these brands are doing nothing, in a tight market that forces everyone to act within their means. The “demand crisis” as statistical analysis firms like to call it, has been brewing since the end of the first half of 2023. The satisfactory level of deliveries observed at the end of last year was only fleeting and hid a more complex reality. Today, everyone must therefore adapt to a market that has already lost almost a quarter of its volumes compared to before Covid, and which could shrink further.
Lower prices? Not for everyone…
This summer, many brands have revised their pricing positions. According to data from AAAData cited by our colleagues at Le Parisien, the prize goes to MG. The average selling price “all models combined” is 12% for the Sino-British manufacturer, ahead of Xpeng and Citroën (- 10 and – 5%). For some, this can be explained by the arrival of cheaper models in the catalog, such as the C3 at the chevrons. For others, it is a net drop in existing catalogue prices. But these drops concern almost exclusively generalist manufacturers. But manufacturers are not reducing the prices of just any model: only those with the lowest CO2 weights and electric models are affected. Thousands of euros less on a Toyota bZ4X, a Volkswagen ID.4, a Mégane E-Tech… manufacturers must restart orders, but only for those cars that will not increase the CO2 average and fear heavy fines in 2025.
The high-end, however, opts for another strategy. While waiting for perhaps more radical measures in the future if the market tightens even more, premium brands prefer to offer gifts to their customers. Normally expensive options that you will never see as standard are arriving for free on certain models. Car week rightly points out that the Hyperscreen is now standard with no price increase on the EQS, whereas it was an option at €7,200. The usually expensive metallic paint at BMW becomes standard on the iX alongside the specific lightweight rims.
Automotive journalist (and a bit of a bicycle enthusiast too). As passionate about new things as industry or the environment, but also anything that will advance mobility.
Published on 09/17/2024 at 07:00
