BMW sold for over 170,000

Author: Yu Yan

Editor: Zhou Zhiyu

After Porsche's price dropped to 440,000 RMB, another luxury brand BMW's price also dropped to over 170,000 RMB, breaking people's perception of luxury cars.

Recently, many car owners have expressed to Wall Street News that they have purchased the BMW i3 for around 170,000 RMB and are expected to pick up the car after the Dragon Boat Festival.

Calculating from the official guidance price of 353,900 RMB, the final landing price of 170,000 RMB means that the entry-level pure electric BMW in China has been significantly discounted. In addition, models like the i5 also have discounts of over 100,000 RMB compared to the guidance price.

BMW, a luxury car brand with a great reputation worldwide for its handling and performance during the era of gasoline, is now accelerating its fall from grace.

Since the rise of domestically produced new energy vehicles, electric cars from BBA have long been living in jokes. Now, with the entry-level BMW models dropping below 200,000 RMB, the saying "if you don't work harder, you can only afford BBA" is no longer a joke.

Facing the roaring arrival of the new energy era, BMW needs to work hard to maintain the value of its current models and uphold its position in the luxury car market before its "new generation" models arrive. This will be a difficult battle.

Defeat

Before this significant price reduction, models like the BMW i3 had already experienced a situation of "trading price for volume".

Taking the BMW i3 as an example, in June 2023, many car owners were able to purchase the BMW i3 for around 250,000 RMB.

By the end of 2023, the BMW i3 underwent a facelift, but the final retail price did not increase due to the update. Instead, further price reductions were needed to drive sales.

A car owner from Anhui started looking at cars in February this year, initially considering models like Tesla Model 3, Model Y, Nio's ES6, ET5T, Xiaomi's SU7, as well as BMW's ix3 and i3. After comparing, the i3 was deemed more cost-effective.

The dealer's price in February was 240,000 RMB, which dropped to 187,000 RMB by the end of May, and after negotiations, the final price for picking up the car was 175,000 RMB. In other words, from February to now, the price of the BMW i3 has dropped by around 70,000 RMB.

The 170,000 RMB BMW i3 is no longer uncommon, with many BMW dealers offering prices around 170,000 RMB. A BMW salesperson in Beijing mentioned that even 170,000 RMB is negotiable. Although each store has different sales policies, BMW i3 below 200,000 RMB is now common.

The aforementioned car owner believes that he does not have high requirements for intelligent driving and wants a high cost-effective electric car, so the current BMW i3 is a very good choice for him. Among the cars he previously considered, the BMW i3 is now the cheapest, truly confirming the saying "can only afford BBA".

In May, due to Porsche's repeated price drops, dealers who couldn't bear the subsidies pressured the headquarters, prompting BMW to proactively issue a letter to the dealerships, stating, "In view of the market background and the huge impact brought by domestic brands, it has been decided to provide BMW 4S stores with multiple substantial subsidy and exemption policies," leading dealers to have more confidence in reducing prices for promotions According to Wall Street News, the landing prices of many entry-level BMW models have dropped significantly, with models like the i5 also being affected.

The recently launched BMW i5 has not escaped the curse of price reductions. It was initially priced at 439,900 yuan, but now many dealers are offering discounts of around 100,000 yuan. The prices of BMW electric cars have plummeted, affecting petrol cars as well, with the entry-level BMW 3 Series priced at around 240,000 yuan.

In terms of sales volume alone, BMW's new energy vehicles have indeed achieved good results through "volume for price." In the BBA segment and even the entire traditional luxury car track, BMW is leading the pack.

In 2023, BMW globally delivered 565,900 new energy vehicles, a year-on-year increase of 30.5%. Among these, pure electric models led by the BMW i3 accounted for two-thirds of the sales, reaching 376,000 units, a year-on-year increase of 74.1%.

For comparison, in 2023, Mercedes-Benz's global total sales of new energy vehicles were 402,000 units, while Audi's new energy sales were slightly lower.

In the Chinese market, the sales of new energy vehicles from the BBA trio no longer match their glorious achievements in the era of petrol cars. BMW still achieves around tens of thousands of units in monthly sales, while Mercedes-Benz and Audi hover around monthly sales of several thousand units.

However, relying solely on volume for price has not allowed BMW to maintain its market share in China as desired.

In the first quarter, BMW's sales in the Chinese market were 187,500 units, a 3.8% year-on-year decline, making it the only major single market where sales declined globally. Coupled with concessions in selling prices, BMW's overall revenue decreased by 0.6% year-on-year, and net profit decreased by 19.4% year-on-year.

Faced with the intense price war in the Chinese automotive market, BMW is also unable to remain unaffected.

What's even more distressing is that while prices have dropped significantly, sales are still declining slightly. In such a situation, it's no wonder prices are falling once again.

Many car owners from last year have found that the cars they bought last year have dropped by tens of thousands this year, and can only console themselves with, "Buy early, enjoy early; buy late, enjoy discounts."

Accumulating Strength

Once known as a luxury brand, BMW was famous for its high-priced options and would attract attention on the road. Now it has fallen to half its price. This is a true portrayal of the fierce competition in the Chinese automotive market.

In the past year, in the new energy market, new energy brands eyeing the BBA market have emerged one by one with impressive sales growth, such as Li Auto, Aito, Nio, etc., especially Li Auto and Aito, both targeting the luxury market, squeezing the living space of other luxury car companies.

For BMW, its own electrification transformation is relatively slow.

As of now, BMW still does not have a pure electric platform, and its current new energy vehicles still come from the CLAR platform, which is compatible with multiple power modes such as ICE, PHEV, BEV. Faced with the escalating price war in the Chinese automotive market, luxury brands like BMW need to adopt a completely new pricing strategy to address this challenge.

In the Chinese market, although in first-tier cities, due to policies and other reasons, the first choice for car purchases is new energy vehicles, in the lower-tier markets, the brand effect constructed by the BBAs in the traditional petrol car era has not been easily replaced by new energy car brands, and some people still choose the BBAs This also means that BMW's brand effect will not dissipate immediately in the short term. It needs to seize the current window of opportunity, capture the minds of Chinese consumers, and lay a more solid foundation for its new energy transformation.

BMW also knows its own strengths.

Wall Street News has learned that, including the BMW M5, BMW will bring nearly ten high-performance models to China this year. By the end of this year, the number of M brand models sold in China is expected to expand to 23, covering compact, mid-size to large luxury cars, with various power sources such as gasoline, electric, and plug-in hybrids.

Facing the diversified market demand in China, BMW still has many cards to play, and can continue to win consumer favor with products before the new platform is launched.

In April this year, BMW also announced plans to increase investment in its Shenyang production base by RMB 20 billion to deepen its layout in China and help the "New Generation" models to start mass production in China as scheduled in 2026.

In the longer term, BMW hopes that the range and profitability of electric vehicles will be comparable to gasoline vehicles. This also means that in terms of investment in the industrial chain and cooperation with partners such as suppliers and dealers, BMW still has a long way to go to find a new balance between product iteration, sales volume, and financial returns.

This will be a long marathon. The halving of the price of the BMW i3 is a metaphor. In this long race with no way back, even a strong player like BMW will encounter setbacks. How to repair these setbacks in the time to come and the damage to brand value is the key question for BMW as it moves towards the new energy era.

BMW urgently needs to win a beautiful victory in the new energy era. Behind it, a group of Chinese new energy vehicle companies are watching closely, and BMW must be prepared to fight back