BYD asks suppliers to reduce prices next year, signaling another brutal price war is on the offing
BYD asks suppliers to prepare for price cuts next year, signaling that it’s preparing for another brutal price war.
In a leaked letter, BYD is demanding 10% price cut from unnamed supplier.
Li Yunfei, BYD’s public relations and branding director said negotiating with suppliers is a common norm in the industry.
“Annual bargaining with suppliers is a common practice in the automotive industry,” he said. “We put forward price reduction targets to suppliers. They’re not mandatory requirements. We can negotiate.”
New-vehicle ATPs were $49,740 in December, an increase of 1.3% year over year and higher by 1.5% compared to November 2024.
New-vehicle sales incentives in December were mostly unchanged from November, holding steady at 8.0% of ATP or approximately $3,958.
China
Last month, ATPs were higher thanks in part to notably strong sales of vehicles transacting for more than $80,000.
-December ATP for an EV was higher by 0.8% y/y, and higher month over month by 1.1%. With an average transaction price of $55,544
Consumer sentiment improvement has led to an increase in prices
China’s auto market saw 227 models with price cuts in 2024, more than the 148 in 2023 and significantly higher than the 95 in 2022.
For all the models with price cuts, the average reduction amounted to RMB 16,000, or 8.3 percent
New energy vehicle (NEV) models saw an average price cut of RMB 18,000, or 9.2 percent. Conventional gasoline vehicles saw an average price reduction of RMB 13,000, or 6.8 percent.
US new car prices declined -4.8% q/q, but remain 0.3% y/y.
Sales incentives in March were flat compared to February at 7.0% of ATP, but higher by 5% than year-ago levels when incentives were equal to 6.7% of ATP (in December, there were 8%).
Cox is expecting new vehicles directly impacted by the 25% tariff to see price increases in the range of 10-15%. In addition, considering the market dynamics, we also anticipate seeing at least a 5% increase in prices of vehicles not subjected to the full 25% tariff.
