The price war in China is escalating. BMW lowers the price of the 5 Series by 140,000 kroner, while Tesla cancels the interest on a number of car loans.
China's car market is rocked by a fierce price war. Competition is putting pressure on car manufacturers. BMW is now offering a big discount on the new 5 Series. Tesla and Xiaomi are also using new methods to lure customers.
BMW is clearly feeling the pressure. The new, extended BMW 525Li M-Sport is now being sold significantly cheaper in Beijing. The price has been reduced to around 400,000 kroner according to Chinese media .
This corresponds to a discount of approximately 140,000 Danish kroner. That is a large amount for a new car model. German premium brands are generally having difficulty selling in China at the moment.
Other brands are following suit with price cuts. Ford, for example, is offering the new Territory plug-in hybrid SUV for cheap. It now costs under 130,000 kroner after a discount of approximately 26,650 kroner.
The elegant MG7 sedan has also had its price adjusted downwards. It now costs around 97,500 kroner. Buyers can also get a bonus of around 7,150 kroner for their old car if it is still running.
Tesla and Xiaomi also lure with offers
Tesla is using financing as a weapon in its price war. Chinese customers can buy the new Model Y Juniper. They can also buy the Model 3 without paying interest.
The zero-interest offer is valid for up to five years for the Model 3, making the car more accessible to many buyers. It is a reintroduction of a previous similar offer from Tesla in China.
Even new players like Xiaomi are feeling the competition. They also have to offer extra benefits to attract customers. Their electric car SU7 Ultra is known for its high performance.
When purchasing the SU7 Ultra, Xiaomi is offering a carbon fiber package. The package is worth approximately 81,250 Danish kroner. This is intended to make the top model, which has over 1,000 horsepower, more attractive.
The fierce price war has major consequences for car manufacturers. Some manufacturers are struggling financially. This also applies to big players like SAIC.
Car brands struggle with the economy
SAIC, which owns the former British MG brand, is reportedly investing in several of its cars, meaning that production costs exceed the selling price of the models in question.
The lack of profit must cover all other costs for the car manufacturer. This puts severe pressure on the car manufacturers' finances. It creates uncertainty in the large Chinese market.
The situation is worsening for European brands by potential new tariffs of 25 percent from the United States. Some observers predict a tough split in China. Only the strongest automakers are expected to survive the current price war.
There are also reports of problems for other established brands. It was recently reported that 40 Mercedes dealerships had to close in China, showing the pressure on the premium segment in the country.
The price war in China shows a market undergoing major change. Many new Chinese car brands are putting pressure on established players from Europe, the US and Japan.
You can read much more about new car models, tests and news from the entire industry, including the crisis we are currently facing, every day here at Boosted.
