China’s electric vehicle price war extends to gasoline cars
Published on: Thursday, March 09, 2023
By: Bloomberg, FMT
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Auto sales have been recovering slower than expected after China abolished its Covid Zero policy in December. (File pic)
Government subsidies in Hubei province in central China, together with discounts from state-backed Dongfeng Motor Group Co have slashed the prices of some cars such as the Citroen C6 by more than 40%, with a 90,000 yuan (US$12,900) discount on offer. The promotion will run until the end of the month, according to posters from dealerships.
Chevrolet started offering discounts of as much as 70,000 yuan on the Blazer, which starts at 230,000 yuan, along with other models like the Equinox and Monza.
Jilin province in northeastern China is offering 150 million yuan of subsidies this month for people buying cars made by FAW Group Co Discounts on individual cars go up to 37,000 yuan.
Auto sales have been recovering slower than expected after China’s abolished its Covid Zero policy in December. Gasoline cars sales have also been hit as EV demand continues to grow, spurred by price cuts from Tesla and BYD Co.
Sales of internal combustion engine vehicles fell 13% in 2022 while battery EVs sales rose 74% and plug-in hybrids surged 161%, according to the country’s Passenger Car Association.
Ron Zheng, a Shanghai-based partner at consulting firm Roland Berger, said the move by the Hubei government is obviously aimed at stimulating car sales because consumers are still cautious about spending, while the models being discounted were mainly ones that needed stock urgently cleared.
“The dramatic price drop will have a huge impact on the residual value of used cars, as well as brand loyalty, and I’d say the move might be a bit short-sighted,” said Zheng.
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