Mercedes-Benz, BMW, and Audi Cut Prices in China as Sales Fall

JAKARTA – Mercedes-Benz, BMW, and Audi have cut prices on a number of models in China after their sales fell by around 20 percent in the first half of the year. The pressure comes as adoption of new energy vehicles or NEVs in the Chinese market continues to rise.

Yicai Global, quoted Tuesday, August 18, reported that the BMW 5 Series, Mercedes-Benz E-Class, and Audi A6L have been discounted several times since the beginning of the year. Meanwhile, the prices of the three models have been relatively stable in recent years because of their strong sales in the medium to large luxury car segment.

Models that were previously priced starting at over 400,000 yuan or about 59,325 US dollars have now dropped to the range of 300,000 to 400,000 yuan. Transaction prices at dealers are even lower.

BMW sales in China reached more than 262,000 units in the first half of this year. Audi posted more than 233,000 units and Mercedes-Benz around 210,000 units. All three were down around 20 percent compared to the same period last year.

“The official price of the BMW 525Li is 368,000 yuan, while the base price after discount has dropped to about 280,000 yuan,” said Wang Yu, sales manager at one of the BMW dealers in Beijing, as quoted by Yicai Global.

According to Wang, the initial price of the BMW 3 Series is now only 258,000 yuan. Previously, the price of the car after all costs came out of the dealer could reach 400,000 yuan.

The price cuts of the Mercedes-Benz E-Class and Audi A6L have also exceeded 100,000 yuan. For some premium models, the discount is even more than 200,000 yuan.

The three brands also offer interest subsidies, special prices for certain customers, and other promotions. Employees of a number of large companies in Beijing who have cooperation with BMW, for example, can get additional discounts of up to 10,000 yuan.

Wang said the promotion was magnified because sales had fallen sharply. At the small to medium dealers where he worked, sales are now about half compared to the peak a few years ago, when monthly sales reached around 100 vehicles.

According to Wang, a number of traditional luxury car 4S dealers this year have stopped operating or switched to selling Chinese NEV brands such as Aito.

4S dealers handle vehicle sales, spare parts, after-sales services, as well as customer surveys or feedback.

Wang said large dealers face high operating costs when luxury car sales weaken. Therefore, more and more dealers are choosing to control the scale of their business.

According to Wang, the challenge for luxury brands is to drive sales through discounts without making the brand value deteriorate too much.

In the midst of this situation, Mercedes-Benz, BMW, and Audi are accelerating the transition to new platform-based electric cars.

Audi has launched electric vehicles under the AUDI brand. Mercedes-Benz is starting to put its new platform-based electric cars on the market, while BMW is preparing to start local production of the Neue Klasse model.

A sales manager at one of the luxury car manufacturers said that the popularity of NEV from traditional luxury brands is still lagging behind. According to the sales manager quoted by Yicai Global, consumers in general have not associated electric cars with these brands. Prices also affect sales.

He assessed the mechanical performance of NEV from traditional luxury car manufacturers is still very good. However, they lag behind Chinese competitors in smart features and the speed of software development through remote or over-the-air updates.

The gap is seen, among others, in the smart driving system and the ability to update vehicle software.

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