What stirred up the car market this year were a group of posters that went viral online in early March. The posters featured the title “Hubei Province’s Strongest Season of Car Purchase Discounts Begins,” with subsidies from the government and enterprises, covering dozens of models from seven major brands under the Hubei Dongfeng Motor Corporation. The most eye-catching among them was the Dongfeng Citroën C6, which received an astonishing subsidy of 90,000 yuan. Dongfeng Citroën is a joint venture brand between Dongfeng Group and Citroën from France, belonging to the French automotive industry. In recent years, it has been undergoing a slow transformation and has shown signs of decline. Internet users jokingly commented, “The C6 priced at 210,000 is outdated, while the one priced at 120,000 is mature and stable.” However, only those who buy cars locally in Hubei and obtain local license plates can enjoy this policy.
For a while, car dealerships in Wuhan were as lively as a market, and many people from out of town also flocked there. The cars that were previously difficult to sell quickly sold out in the hands of dealers, and local consumption received a boost, seemingly making everyone happy. But Li Hongtao, a dealer in Suzhou, couldn’t sit still. He is the general manager of Suzhou Century Motors and owns more than a dozen 4S dealerships in the area, considered to be an industry leader. As soon as news of the price reduction in Hubei spread, the orders at his dealership were quickly affected. Some consumers saw prices dropping elsewhere and even canceled their orders, planning to wait and see.
Century Motors was founded by Li Hongtao’s predecessors in 1998 and gradually grew. Li Hongtao, born in 1982, belongs to the second generation of the family business. He actually has several subsidiary brands of Dongfeng Group, such as Dongfeng Fengxing and Dongfeng Qichen, both selling fuel-powered cars, and their business has become increasingly difficult in recent years. However, this round of price reduction by Dongfeng Group is limited to the Hubei region, so they cannot enjoy the policy benefits and instead suffer a more significant impact as they belong to the same company. As a dealer, Li Hongtao can only communicate with the headquarters to see if he can negotiate some price reduction measures and also approach the local Business Bureau to see if he can obtain policies. “To be honest, local governments have already implemented quite a few promotional policies in the past two years, and everyone is aware of the situation.”
But it’s like a game of cards, when the previous player makes a move, the next player has to follow suit, even if reluctantly. After Hubei, other regions began to follow suit one after another, especially several major automotive industrial provinces. For example, Jilin Province implemented subsidies from the government and enterprises in collaboration with the First Automobile Works Group, covering all series of products from brands such as Hongqi, Jiefang, Benteng, FAW-Volkswagen, and FAW-Toyota, with discounts ranging from one to two thousand yuan. Sichuan Province and Chongqing City also claimed to have allocated hundreds of millions of yuan to provide subsidies for car purchases to stimulate local automotive consumption. Some leading car companies initially stated that they would not participate in price reductions, but eventually succumbed to market pressure and introduced disguised price reduction measures. In just a few weeks, almost all mainstream automakers became involved, resulting in a frenzy of price cuts.