Shulou(Shulou.com)11/24 Report--

Wen | Aohu

"it's too curly!"

When Tesla suddenly reduced the subsidy war, when Weilai lowered the entire department by 30,000 yuan, when the Onksera Civic rose from 89900 yuan, when Xiao Peng G6 shouted 209900 yuan, when Volkswagen ID.3 officials lowered.

We blurt it out again and again, and hear other people sigh again and again. Except for the word "volume", today's car market seems to have nowhere to go.

Competition belongs to competition, and previously on volume, when the word volume first became popular a few years ago, most users knew what it pointed out and reflected. It is a kind of "bad competition that does not produce real value, waste resources, and is meaningless" (or no matter how you interpret it, it probably means something similar).

When applied to the automotive industry, the inner volume is supposed to refer to bad, irresponsible and unsustainable competitive behavior: maliciously smearing competitive products, exaggerating publicity, burning money to cheat compensation, word games, artificial demand, disregard of social responsibility, PPT car building. be too numerous to enumerate.

However, in only a few years, the word "inner volume" seems to have been "greeted".

Today, people often use the term "inner volume" to refer to all the fierce business competition. The reduced price is the volume, the addition is also the volume, the performance improvement is the volume, the ultimate stacking material is the volume. It doesn't matter whether it is good for consumers, for the industry, or for the world. It can all be called volumes.

When all the benign and bad competition is classified as "inner volume", the real "inner volume" will naturally become invisible. Those behaviors and phenomena of bad competition no longer need to bear the attention of the public and no longer arouse people's thinking.

Even, as the media knowingly abuse the word "inner volume" in order to attract the audience's attention and improve their own influence, this in itself is an excellent example of explaining what is meant by "inner volume" textbook style.

Once some people call normal competition "volume" to win eyeballs, other media people who do not follow may be ignored by the audience. When the game continues undisturbed, it's only been a few years, and people have forgotten the original meaning of the word "volume".

Every once in a while, a popular online search sighs that "modern Chinese has been destroyed." However, it is not only modern Chinese, an imported word that has just been introduced into fashion for only a few years, isn't it also cleaned by our desensitization at the speed of light?

Bad competition such as exaggerated propaganda still exists, but after the "inner volume" has been abused, there is no longer a word that can accurately describe it.

Nine times out of ten, the "volume" that is often surprised and exclaimed by the automobile industry today does not refer to the original meaning of "volume", but only laments the fierce competitive environment, which is essentially a cyber translation of "price war."

Since the so-called "roll" in the car circle is not a "real roll", can these suicidal competitions, which do not go down to the end of the day, go on and on?

Opportunity for technological change. In early July, the China Automobile Association organized more than a dozen car companies to sign a commitment to fair competition in a well in the desert. However, the expression "not to disrupt fair competition in the market at abnormal prices" caused trouble and had to be deleted urgently.

Before this Oolong, with the continuous intensification of the subsidy price war in various places at the beginning of the year, the China Automobile Association has repeatedly called for "price war is not a long-term solution, return to normal order as soon as possible."

The complete way to open the price war is the cost-effective war. The "sex" here includes not only the power, range and control of the traditional "performance" category, but also a variety of luxurious and comfortable equipment. In a word, reduce the price and increase the allocation.

It is well known and indisputable that the auto affirmative movement, led by Chinese auto brands, especially new power brands, is accelerated by technological changes in new energy and intelligence.

In the past, new power car companies enjoyed a double dividend of cheap capital costs and high valuations of growth companies in an era of low interest rates. Compared with mature car companies, they naturally tend to ignore low gross margins and net losses for the time being in exchange for market share in exchange for generosity.

Of course, it is certainly not just high configuration, the process of new energy and intelligence is accelerated by the R & D investment and bold application of new power car companies. Whether it is the three electricity technology or high-level auxiliary driving, the objective application space of the new technology is filled by the new forces into reality.

The new commercial forces represented by the new forces and the new technological forces represented by the new energy have worked together to break the inherent division of levels and stir up the market to make the traditional independent "new momentum". Make foreign car companies that fail to follow up make an exception and cut prices to stabilize their position for the time being.

But now both forces are on their way to marginal decline after a sharp push.

The advantages of the new forces in the past few years are, of course, inseparable from the opportunities for change and their own efforts, but the background that can not be ignored is that the globalization of capital and the low interest rate of the US dollar have brought unprecedented low cost of capital. Start-ups that rely almost entirely on financing take advantage of this dividend.

These came to an end with the rise in interest rates on the dollar in 2022. The weighted average cost of capital of s & p 500 companies soared from less than 6 per cent in early 2022 to about 9 per cent in mid-2023, or 50 per cent a year later, according to Bain, a consultancy.

The disappearance of cheap money means that the cost of renewing debt after maturity will rise sharply. At the same time, because of the rise in risk-free interest rates, the attractiveness of growth companies, that is, valuations, has also been suppressed, and most of the new forces have accelerated the process of increasing gross margins and narrowing losses in the past year.

Opportunities for change in new technologies are also running out of redeemable surplus value in the short term. The current technological change in automobiles, whether new energy or intelligent, should be described as "application-driven non-qualitative technological innovation" in the words of Fengrui Capital Li Feng.

There is no qualitative change before and after electrochemical technology, after several major application innovations, such as high energy density, high integration, 800V fast charging (at present), the potential technology application space that can achieve obvious results without relying on large-scale capital investment in the short term has been very limited.

To exaggerate, even if solid-state batteries make a breakthrough overnight, the deficiency of energy infrastructure can no longer be pushed back.

This is especially true for intelligent driving, where the L3 level has been pushed again and again as the starting line for autopilot, and it is almost impossible to launch applications in the short term. Technologies such as navigational aids are not enough to bring about qualitative change (liberating driving), which in turn suppresses the room for the development of the think tank.

New energy and intelligence are still the future, but the first wave of innovative opportunities for the application of existing basic technologies has been exhausted. In the long history of human scientific and technological development, the opportunities brought by technological innovation are always short-lived, and we can't always rely on technological advantages to create business advantages.

I can't see clearly, but the road is on the other side of the story. Traditional cars, including foreign brands that are too late to catch up, as well as domestic cars that cannot be tracked in terms of class positioning, are also fighting back or maintaining their living space in their own way.

The overall profit margin of the auto industry in the first half of this year was only 4.8%, according to the statistics bureau quoted by the China Automobile Association. For comparison, the profit margin of the auto industry for the whole of 2022 was 5.7%, 6.1% in 2021, and 0.9% lower in just six months this year.

Of course, new forces are bound to be wrapped in it, and this is the essence and result of what we call "volume" today.

When the overall profit margin is already less than 5%, for those companies with lower profit margins, if the demand for their products is not expected to recover in the short term, then it is more reasonable to stop production and stop production or even shrink the scale than to sell cars at a loss at an endless price cut.

Superior car companies are busy configuring volume prices, seizing the share of weak car companies to strengthen themselves, this is a road with an end point.

Although the subsidy price war at the beginning of the year is huge, it is largely due to the demand cliff at the end of last year and the rumors about the implementation of country six B in July at that time. The price reduction caused by inventory pressure within a certain period of time may be unprecedented, but it is clear that it will not last.

The pressure of survival is great, but it is about to reach the limit of price reduction and addition. On the other hand, once the new forces get through the period of gross profit-share bust and hold on to the size of the market needed for survival, the profit-seeking nature of capital will prompt them to increase their profit margins.

In addition to the macro reasons, there is indeed uncertainty about the specific operation at the micro level.

Today, represented by new energy, it is difficult for car companies to give their products the emotional value that is common in the fuel era, and neither the new power nor the BBA has been able to find the right way today, which is also the micro reason why we all rush to the "inner volume" together.

In the era of BBA fuel, it is easy to sell the flagship to 3-4 times the price of the entry car, but it is difficult for the electric car to get close to the million price, such as "is the class superiority of luxury cars an original sin?" As mentioned in, after the Model S / X has not been replaced for a long time, millions of electric cars have almost no market.

There are two traditional upward paths in the fuel era, the sports track and the hard cross-country, one loses its adrenaline stimulation because of the loss of sound, and the other is limited to the civilized world because of its weight and range.

The electric era may really have a new path that is different from the past, and the new form of totem cars will also determine the new direction of mass-produced electric cars to build brands.

Tesla and ideal, as discussed in the link above, are relatively positive examples of new forces. No matter pink or black, it is difficult to say that the products of these two companies can be said to be "good value for money" according to the cost of BOM.

They all have certain premiums and high gross margins, which makes them stand out and go ashore early. Consumers pay that part of the consideration, what they buy is Tesla and the ideal brand, personal mapping, future development and other non-material value.

Similarly, there is the direction of exploring the "upward path". Tesla launched the pure electric supercar Roadster 2 as early as 2017, but repeatedly skipped tickets for six years, and the Cybertruck released two years later will also be delivered in the near future.

This may imply that in the eyes of Tesla, the pure electric supercar enthusiastically rekindled by domestic brands today is not a good choice.

Using supercar as a brand totem is a natural continuation of the fuel era in the era of pure electricity, and Tesla did not give it a high priority. Although Cybertruck is very different from it in terms of image positioning and market space, it can be matched in public opinion and influence.

The two extreme market segments of economical cars and supercars in the fuel era are both mature and mature, decades after the invention of the car. Perhaps electric cars are not developed enough to differentiate into a handful of Halo Car.

The ideal pure electric flagship MEGA may be like the Chinese version of Cybertruck to some extent: the national car on the other side is a pickup truck, and our side is a family trip. In addition, both have shapes that are discernible from conventional cars.

If these two products are successful (it does not need to be pure commercial success), it may herald the brand building in the era of pure electricity, and there is indeed a new path: to completely jump out of the new form of traditional cars. Based on this concept to develop a wild brand totem.

Tesla (to some extent) and Xilai's proven service is a more secure brand value-added path, with mature and differentiated service facilities, both can compete effectively compared to competitors' battery life performance-lower battery costs. ("it is better to learn to do sea bottom fishing than to hold back cross-country overrunning")

No matter how the final brand value of the electric era is reflected, whether it is an alternative brand totem different from the supercar in the fuel era, or a larger proportion of services that can not be matched in the fuel era, or it is still a pure electric supercar that promotes the brand off-road, car companies will find new business models to make brand premiums to improve profit margins.

Pure hardware strength under the same price, especially the pursuit of high configuration and low price purely by squeezing costs, may only be a temporary phenomenon in the process of disconnection and the local normality of the economic market. For another part of the market, businesses will find their own way out.

This article comes from the official account of Wechat: autocarweekly (ID:autocarweekly)

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