Prices of Chinese cars have fallen. Why do experts recommend postponing the purchase? Chinese automobile companies sharply reduced car prices in Russia 11.29.2023, 20:46

In November this year, Chinese automakers began to sharply reduce the prices of their products. This trend is most clearly manifested in the example of Chery’s model range: for example the Tiggo 8 Pro hybrid crossover it got cheaper immediately increased by 350 thousand rubles (or 6.7%).

Last autumn month, Chery also made a discount on the Tiggo 7 Pro Max SUV: in two trim levels the model became more affordable by 110 thousand rubles.

The Tiggo 8 Pro Max crossover in one of its versions has become impressively cheaper by 300 thousand rubles.

In all trim levels, the Chery Arrizo 8 sedan lost 150 thousand rubles in price, while the Tiggo 4 Pro SUV lost 80-130 thousand rubles, depending on the performance level.

This move was also appreciated by other Chinese players: Chery’s strongest rival, the Chinese brand Haval, which produces its cars in the Tula region, saw the price of the Jolion crossover fall by 100 thousand rubles this month.

Chinese Changan then rewrote the price tags of 14 of 16 models on the market, the cost dropped by 30-100 thousand rubles, the Chinese Cars portal reported. According to the Quto website, Chinese JAC made the biggest comeback:

The price of the SUV JS6 dropped by 499 thousand rubles.

In November, the Geely company began to ask 100 thousand rubles less for the Atlas Pro and Tugella crossovers, and the Omoda brand S5 sedan became 70-80 thousand rubles cheaper in November.

Competition is intensifying

Andrei Olkhovsky, general director of the Avtodom dealer holding, told socialbites.ca that competition for the Russian market next year may intensify among Chinese automobile companies, which could lead to a decrease in prices.

“The share of Chinese cars in Russian car imports increased from 10 percent in 2021 to 92 percent in 2023. “If the trend of increasing automobile imports from China continues, there may be excess supply of Chinese brands and competition between them in 2024,” Olkhovsky said.

Prices for Chinese cars in 2023 were formed in 2022, when the yuan exchange rate increased to 18 rubles. The source explains that currently the exchange rate is 12.4 rubles per yuan, but manufacturers have not reduced prices following this.

AutoSpetsCenter dealer holding believes that despite the November trend, we should not expect this to continue in the near future.

“Since the beginning of 2023, the cost of cars on the Russian market has increased by 18%. The increase in prices to the maximum level in the autumn caused demand to decrease slightly.

Now some Chinese brands have reduced their prices due to the strengthening of the ruble, but for now this is a short-term trend,” the company predicts.

Representatives of the Avilon group of companies share a similar opinion; Ilya Petrov, retail sales manager of the dealer holding, notes that the cost of products from official Chinese distributors varies more limitedly compared to dealer parallel imports.

Chinese automakers are reluctant to discuss this issue; Only Haweil Motor Rus responded to socialbites.ca’s requests, stating that they predict market development taking into account many factors, including the competitive environment.

More and more Chinese

Automobile experts interviewed by socialbites.ca were divided on the reasons why prices for Chinese cars began to fall. Igor Morzharetto, partner of the analytical agency Autostat, notes that one of them is the competition in the segment of 2-2.5 million rubles. Only Ladas are sold at a price below 1 million rubles, and the simplest Chinese cars are sold at a price below 1.5 million rubles, but currently about 200 Chinese models are already officially presented on the market.

“All Chinese companies have added serious risks to the price of a car in the Russian Federation,

Since the country and many companies were under sanctions, the ruble exchange rate was quite unstable. Distributors and dealers had a serious margin, and competition in the market and a more or less stable ruble situation make it possible to make at least some discounts for selling cars delivered in the previous month.

“Moreover, large companies that import cars through parallel imports are experiencing a serious recession, the market has stopped,” he said.

– explains.

Almost all Chinese companies offer discounts and their own credit programs. The automobile expert points out that discounts can reach up to 1 million rubles when the cost of the car is 5-6 million rubles.

“Participants in the auto market say that it is better to buy a car now and before mid-December, especially since the interest rate is expected to rise and the cost of credit is expected to rise. So the discounts will continue until approximately the end of January. “And traditionally prices rise at the beginning of the year,” he added.

Maxim Kadakov, editor-in-chief of Za Rulem magazine, says that the decline in prices of Chinese cars is due to the fact that prices are inflated to the maximum this year. In an optimistic scenario, he predicts the cost of new cars by the beginning of 2024 will be the same as it is now.

“How did cars become cheaper? Four months ago it hit the ceiling due to rising prices and overheating.

For example, the cost of a car is 3.3 million rubles, then its price was increased by 200 thousand rubles, and now it is discounted again by the same amount.

Everyone needs working capital, so it is better to sell a car at a profit of 100 thousand rubles than to wait to sell it at a profit of 200 thousand rubles,” says Kadakov.

Pause purchasing

According to independent automotive industry consultant Sergei Burgazliev, companies are reducing prices on certain models because they are selling illiquid stock. If there is no urgency to buy a car, you can wait until January-February, when the market traditionally declines and dealers may accept a lucrative offer.

Anton Shaparin, vice president of the National Automobile Association, says Chinese auto companies have had to adapt to declining demand as the population has less money, so profits are falling.

“Now these companies are saturating the upper price niches, after which they will begin to move towards the rear, where they will have to compete with AvtoVAZ. “At the beginning of 2024, the market will sink even further because the public does not have credit money and there are exchange rate risks,” he said.