From：Internet Info Agency 2019-03-18 17:16:57
In the past few days, luxury automakers: Mercedes-Benz, BMW, Lincoln, Volvo and Jaguar Land Rover have issued statements stating that in order to actively respond to the policy of lowering the VAT in manufacturing, the guidance retail price of all models sold in China will be lowered in advance. And then the national tax reduction policy will benefit Chinese consumers as soon as possible. The price cut range is from a few thousand yuan to tens of thousands yuan.
Luxury automakers take the lead in lowering the guidance price
In the government work report made at the second meeting of the 13th National People's Congress, Premier Li Keqiang pointed out that a larger tax cut will be implemented this year. The manufacturing VAT will be reduced from 16% to 13%. From April 1 this year, the VAT rate reduction policy will be officially implemented. The automotive industry is one of them.
On the evening of March 15, Mercedes-Benz China took the lead in announcing that in order to respond to the tax reduction policy, consumers can enjoy the price reduction in advance from the purchase of the whole model line. After the manufacturer's suggested retail price (guide price) adjustment, the Mercedes-AMG models have a maximum drop of 64,000 yuan, and the Mercedes-Maybach models have a maximum drop of 60,000 yuan. The Mercedes-Benz models have the highest drop of 40,000 yuan, the highest decline in SMART models is 7,000 yuan.
On March 16, BMW also announced that it will cut the price of models sold in China, including the BMW and MINI brands. After that, Jaguar Land Rover, Lincoln and Volvo also announced a reduction adjustment of the guide price for the series of models sold in China.
For luxury automakers lowering the guide price in advance, some media said that it’s very genuine for them to lower the price, so consumers could be closer to the dream car.
Will other brands do the same thing? Even if they keep up, the effect on sales is very limited. In the current Chinese auto market, the guide price of many automakers has been far from the transaction price. The price system of auto market has nearly collapsed.
The price system of auto market has nearly collapsed.
According to the current national regulations, cars should be pricing to market. The automakers will suggest the dealers a retail price, which is the guide price, when they launch a new car. And the dealers will sell the car to consumers around that price, and the final price will be the transaction price.
Usually, if the transaction price and the guidance price are the same, the dealer has a sales profit of about 6%. If it is lower than the guide price, the profit of the dealer will decrease. If the transaction price is only 90% of the guide price or lower, the dealer will lose money.
In the past two years, due to the fierce competition in the automobile market, many car brands are selling cars at a discount of 20% of the guide price. By the end of the year, automakers will subsidize them according to sales performance. Some dealers can basically stay breakeven after receiving subsidies, and some brands still lose money even if they receive subsidies.
Most luxury auto brands are offering significant discount. The automaker's suggested retail price, the so-called guide price, has become meaningless, and the Chinese auto price system has nearly collapsed.
At present, if a consumer buys a car with a total price of 100k yuan, including a VAT of 16k yuan. After the tax reduction, each car will be charged less 3000 yuan. The discount of luxury brands such as Mercedes is generally not more than 3%, which is basically consistent with the tax reduction.
The suggested retail price of the BMW 740Li was 1.058 million yuan. After the price reduction of 30,000 yuan, it was lowered to 1.028 million. However, the dealer's offer is 868,800 yuan. Even with a drop of 30,000 yuan, the offer with the dealer is still far from it.
To deal with the current price system, we must stabilize the transaction price and the price should be open and transparent. In addition, automakers can no longer set some high indicators and stress the dealers.
