Author: Yuyan Editor: Zhou Zhiyu After the price of Porsche fell to more than 440,000 yuan, the price of another luxury brand BMW also dropped to more than 170,000 yuan, breaking people's perception of luxury cars. In recent times, many car owners have told Wall Street News that they have purchased the BMW i3 for around 170,000 yuan and are expected to pick up the car after the Dragon Boat Festival. Calculated by the official guide price of 3.539 million yuan, the landing price of 170,000 yuan means that the entry-level pure electric BMW in China has been cut in half. In addition, models such as i5 also have discounts of more than one million yuan compared to the guide price. BMW, a luxury car brand with a rich reputation worldwide, has been accelerating its fall from the altar due to the rise of domestic new energy vehicles. Since the rise of domestic new energy vehicles, BBA's electric vehicles have long been living in jokes. Now that the entry-level BMW has dropped below 200,000 yuan, the joke of "if you don't work hard, you can only afford BBA" is no longer a joke. Faced with the howling of the new energy era, BMW needs to work hard to maintain the value of its models on sale and uphold its positioning as a luxury car before its "new generation" models arrive. This will be a difficult battle. Loss Before this significant price cut, models such as BMW i3 had already shown signs of "price for quantity." For example, when some owners bought the BMW i3 in June 2023, the lowest price they got was around 250,000 yuan. By the end of 2023, although the BMW i3 had been redesigned, its terminal price did not rise due to the update, but had to continue to be reduced to drive sales. A car owner from Anhui began car shopping in February of this year. Initially, he considered models such as Tesla Model 3, Model Y, NIO ES6, ET5T, and even the Xiaomi SU7, and also took a look at BMW's ix3 and i3, but ultimately found that the i3 was more cost-effective after comparison. The dealer's quote for February was 240,000 yuan, and by the end of May, the quote was 187,000 yuan. After several conversations, the final result was picking up the car for 175,000 yuan. That is to say, the price of the BMW i3 has dropped by about 70,000 yuan from February to now. BMW i3 for 170,000 yuan is not uncommon, as many BMW dealers can offer prices around 170,000 yuan. A BMW salesperson in Beijing said there was even room for negotiation at 170,000 yuan. Although sales policies of each store differ, BMW i3s for less than 200,000 yuan are everywhere. The car owner mentioned above believes that he does not have any requirements for smart driving and just wants a cost-effective electric vehicle. The current BMW i3 is a very good choice for him. Among the several models he had previously focused on, the BMW i3 is now the cheapest, which truly confirms the old saying "if you don't work hard, you can only afford BBA." In May, as the price of Porsche continued to fall, dealers who could not bear the subsidies confronted the headquarters, and then BMW took the initiative to send a letter to its 4S stores, "due to the market background and the huge impact of domestic brands. It has been decided to provide many subsidies and exemptions to BMW 4S stores." This also gave the dealers more confidence to reduce prices for promotion. Wall Street News learned that the landing prices of many entry-level BMW models have dropped significantly, even the i5 and other models are affected. The newly launched BMW i5 has also not escaped the curse of price cuts, with a starting price of 4.399 million yuan and many dealers offering discounts of around 100,000 yuan. The collapse of BMW's electric vehicle prices has also affected petrol cars, with the entry-level BMW 3 Series priced at around 240,000 yuan. From a sales perspective, BMW's strategy of pricing for quantity with its new energy vehicles has indeed worked well, which is enough to lead the way among BBA and even the entire traditional luxury car track.

Author: Yuyan Editor: Zhou Zhiyu The weather is good today The weather is good today.

Porsche's allies can't sit still because of the failure of electrification transformation.

Following the Porsche China's dealers’ ' ultimatum', Porsche's shareholders at the Porsche shareholders' meeting questioned why Porsche CEO Oliver Blume insisted on the goal that more than half of their cars sales be electric in 2026. One of Porsche's major institutional shareholders, DWS Investment GmbH, even said that the low stock price was a reflection of Porsche's corporate governance flaws.

It's no wonder that investors are anxious. Since the beginning of this year, Porsche's stock price has been continuously declining, down 14.4% from the beginning of the year, while Ferrari has risen 23.52% over the same period. Even Porsche's stock price has directly hit the lowest point since going public recently - €69.2/share - and still hovers around €70/share. Compared with the peak in May last year, which was down 41%.

Investors believe that the slowing development of the global electric vehicle market and poor sales of Porsche electric vehicles are already threatening the company's sales and profits. As a result, Porsche shareholders are calling for the luxury car manufacturer to slow down its electrification efforts.

The reason for this is that when Porsche was reforming its product line, it faced poor sales in the Chinese market, falling prices, and problems with parts procurement, which put pressure on Porsche's share price. Blume summed up Porsche's situation in the Chinese market as "difficult."

Porsche's sales in China have been declining for two consecutive years since 2022, contrasting sharply with the hype of previous years. Sales dropped by a further 15% in 2023.

According to the first-quarter financial report this year, the situation in the Chinese market is even more serious. Porsche sold 16,340 cars in China in the first quarter, down nearly 25% YoY.

When sales are not guaranteed, price cuts become an inevitable path, harming brand value is also inevitable.

In May, a dealer gave a price of more than 440,000 yuan for the Taycan model. Some analysts joked that the depreciation rate of Taycan was faster than that of the 911 sports car.

In the Chinese market, dealers are facing heavy pressure on sales and have to subsidize consumers by lowering prices to boost sales, while Porsche China selects dealers to stockpile cars to complete sales tasks, increasing their financial pressure, prompting dealers to rise up and 'pressure' Porsche.

Porsche responded, "The current automotive industry is undergoing unprecedented major changes, and Porsche China and its dealers are facing several complex issues that are both opportunities and challenges."

As the ultimatum and falling sales occur simultaneously, a series of chain reactions is taking place. Sales in the first quarter were €8.1 billion, down 12.7% YoY; the auto business gross margin was 23.4%, down 30.3% YoY.

Luxury brands have always prided themselves on their higher profit margins and high-end brand image, but now Porsche is speeding up its descent from the pedestal.

Previously, Porsche's electrification was seen as a new growth curve. However, the sluggish demand for electric vehicles now proves that the challenges are greater than the opportunities. Ingo Speich of investment firm Deka Investment commented that consumers are more likely to resist Porsche's electric cars than buy them.

In the wave of electrification, these traditional luxury brands' aggressive stance on electrification won them good performances in the capital markets. When Porsche went public in 2022, electrification was an important narrative in the capital markets. At that time, as Europe's largest IPO in recent years, its market value once exceeded that of BMW and Mercedes-Benz.

By 2023, Porsche said it aims for pure electric and plug-in hybrid models to account for more than 50% of its new vehicle sales. By 2030, Porsche aims for pure electric vehicle sales to account for more than 80% of new vehicle deliveries.

Also because of a series of aggressive plans, Porsche's stock price reached nearly €120 in May 2023, up nearly 50% from its IPO, and the capital markets were excited. Nonetheless, Porsche's electrification process is still aggressive. Some representative models have further plans for electrification this year, and its iconic 911 model has also adopted a super-lightweight and high-performance hybrid system. In theory, Porsche should continue its past glory.

But judging from the current sales, electrification cannot continue to escort Porsche. A clear data point is that the Taycan, Porsche's flagship electric vehicle, delivered almost half the number in the first quarter.

Porsche's high profit margins and high-end brand image have always been a source of pride for luxury brands. Now, Porsche is accelerating its descent from the altar.

Many international deluxe brands in the current Chinese market are facing difficulties in maintaining brand value and sales volume. Electrification was once their "lifesaver" for growth, but nowadays, it has become a boomerang that hits their strategic adjustments and causes setbacks in the capital markets.

These traditional car companies also have to make their own choices on how to balance their finances during the transition of electrification.