Here is the translation of the provided text into English: Despite the minimal effectiveness of trading price for volume, the price war should come to a halt.

The price war is akin to the recent persistent high temperatures in Beijing, causing restlessness and unease, yet there is no way to avoid it.

Recently, at a Guangzhou Honda 4S store located in the Beijing Economic-Technological Development Area, a salesperson stood at the entrance fanning themselves.

Upon seeing customers enter the store, they did not actively approach to greet them, continuing to wave their fan to cool down.

Upon our proactive inquiry, we learned that the store currently offers significant discounts on its vehicles.

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For instance, the new generation of Accord starts at a guided price of 179,800 yuan.

If purchased in full, a discount of 40,000 yuan is offered, and if financed, a discount of 70,000 yuan is available with an interest rate of 10 percent, allowing for full repayment after one year.

"This model is our biggest loss-maker, with nearly a 15,000 yuan loss per sale.

The manufacturer only gives us a 35,000 yuan discount, and any additional discounts are up to the dealer's policy.

However, the manufacturer no longer assesses our sales volume, so we sell as many as we can."

The salesperson also mentioned that the manufacturer's pricing plan is set monthly, and it is highly likely that the terminal prices will be adjusted upwards in August.

As for the high temperature inside the store, the salesperson jokingly said it might be to save costs by intentionally breaking the air conditioning.

In contrast to the carefree attitude of Guangzhou Honda dealers, a nearby FAW Toyota dealer appears much more optimistic.

"The Corolla is our best-selling model, but we lose 10,000 yuan for each one sold.

On the other hand, MPVs like the Granvia are profitable.

For example, the four-wheel-drive model has a market guide price of 369,800 yuan, with a maximum discount of 70,000 yuan.

Because the manufacturer's rebate is high, we still make money even with a discount of 80,000 yuan."

The salesperson also stated that with the arrival of the new generation Prado in August, this model is expected to become the next "volume and profit" model.

"This model has a higher unit price, so the manufacturer gives us dealers a higher rebate, and our store has already received deposits from dozens of customers."

Regarding the price war, the salesperson believes it will continue.

"Led by BYD, electric vehicle sales are significant, and they are always reducing prices, which quickly encroaches on the market share of fuel vehicles.

Coupled with the recent addition of 20,000 new energy vehicle quotas in Beijing, brands like FAW Toyota, which mainly sell fuel vehicles, can only continue the price war."

In fact, this view is highly consistent with the attitude of FAW Toyota executives.

Dong Xiuhui, Secretary of the Party Committee and General Manager of FAW Toyota Motor Sales Co., Ltd., recently stated publicly that the current basic direction of FAW Toyota is to maintain scale and then to maintain stable profits for dealerships, which are two prerequisites.

"I believe the price war will continue in the second half of the year, but the intensity may decrease because many companies can't keep up.

Of course, we don't want to fight a price war, but we hope to maintain a certain competitiveness in the market."

We can't afford to lose more; the price war should stop.

Following BMW's first shot in the "anti-price war," many joint venture car companies have followed suit.

First-tier luxury brands including Mercedes-Benz and Audi have ended their "price reduction to maintain market share" strategy.

In addition, Volkswagen, Toyota, Honda, Volvo, and other brands have decided to adjust their terminal policies from July, reducing terminal discounts or no longer further reducing prices.

"In our store, only the RS model (performance model) is not sold at a loss, and other models are basically sold at a loss.

The A6L has already been adjusted back by 20,000 yuan, and the Q5L has been adjusted back by more than 10,000 yuan."

A salesperson at a FAW Audi 4S store in Beijing said: "The current terminal price is still relatively discounted compared to the end of last year, with an average increase of about 40,000 yuan.

Now the price in the store changes every two days, and it is highly likely to be adjusted back to the level at the end of last year."

Coincidentally, a salesperson at a BMW 4S store in Beijing also told us that the terminal price adjustment will align with the end of last year.

"Currently, the price of the vehicles sold in the store has been generally adjusted back by about 10,000 yuan, and it will continue, eventually aligning with the end of last year."

Regarding BMW's decision to exit the price war first and adjust the product prices, the salesperson said that the biggest change he felt was that the department leaders no longer scolded people in meetings.

"The manufacturer has reduced the sales target for us dealers by 30%, and we can easily achieve the sales target.

The price of the cars we buy from the manufacturer is at a 10% discount.

Before that, the manufacturer did not intervene too much in the terminal price system for dealers.

After the price war started, consumers' wait-and-see sentiment was heavier, and it did not effectively promote sales.

Now that the price war has stopped, although the flow of people is a bit less than before, there is not much difference in sales volume."

BMW's decision to exit the price war first and adjust the product prices will inevitably lead to a loss of market share, which can be seen in some clues at Mercedes-Benz 4S stores.

"It's noon now, and many people have gone to eat.

If you come to the store in the morning or afternoon, our salespeople are basically not enough, and compared with before, the flow of people these days is indeed a bit abnormal.

We have learned that many customers come to our Mercedes-Benz store after seeing BMW."

A salesperson at a Mercedes-Benz 4S store in Beijing said.

However, the flow of people has not yet fully turned into sales volume.

"BMW has just announced its exit from the price war, and many customers come to our store to compare prices.

Moreover, we are also adjusting the price, and the conversion situation will be more obvious in late August."

The aforementioned salesperson said, "We really can't afford to lose any more.

If the price war doesn't stop, dealers will have to withdraw from the network on a large scale."

Despite the minimal effectiveness of trading price for volume, China's Automobile Dealers Association's latest "2024 China Automobile Dealers Development Report" shows that under the impact of the price war, the increase in sales volume of the top 100 dealers did not lead to an expansion of revenue scale.

The total revenue in 2023 was 1,931.7 billion yuan, which is basically the same as in 2022.

In terms of profitability, the gross profit of new and used cars has declined to varying degrees.

In other words, a slight increase in revenue and a significant decrease in profit have become the situation faced by major automobile dealers.

A second-tier luxury brand dealer also confirmed this situation.

"Currently, our store offers a discount of 150,000 yuan on the XT6 and 145,000 yuan on the XT5.

After selling these batches of cars, the price of the next batch of cars will be slightly adjusted, but it should not exceed 5,000 yuan."

A salesperson at a Cadillac 4S store in Beijing said, "Many brands have withdrawn from the price war because there has been no significant increase in sales volume, but our store's price reduction measures and effects are quite obvious.

As long as the price can be discounted to a certain extent, the sales volume is still good.

Our store's scale is relatively small, but we can still sell more than 30 cars a month on average."

However, according to third-party data, Cadillac's cumulative sales in the first half of the year were 43,804 units, a year-on-year decline of 73.2%; among them, the CT5 and XT5 models, as the sales leaders in the sedan and SUV fields, had a cumulative sales volume of 28,559 units and 5,844 units respectively from January to June, with a year-on-year decline of 24.4% and 13.5% respectively.

It's not just Cadillac that has seen minimal effectiveness from trading price for volume.

In the first half of the year, BMW delivered a total of 1,096,500 vehicles worldwide, a year-on-year increase of 2.3%.

However, in the Chinese market, sales in the first half of the year declined by 4.2% year-on-year to 375,900 vehicles; Audi's cumulative sales in China in the first half of the year were 292,000 vehicles, showing a downward trend year-on-year.

While sales are hindered, the profits of companies are also damaged.

In the first quarter of this year, BMW Group's net profit was 2.951 billion euros, a year-on-year decrease of 19.4%; Mercedes-Benz's net profit in the first quarter was 3.025 billion euros, a year-on-year decrease of 24.6%; Audi's pre-tax profit in the first quarter was 981 million euros, a year-on-year decrease of 58.4%.

Some car company executives said that the car company's "price war" allows consumers to buy cheaper cars or buy higher-end brand models with the same budget.

However, in order to capture market share by frantically reducing prices, some car companies have reached the point of disregarding costs, which not only damages the long-term development of the company but also affects the healthy development of the entire industry.

The China Automobile Dealers' Inventory Early Warning Index survey shows that in June, China's automobile dealers' inventory early warning index was 62.3%, and the inventory early warning index was above the line of prosperity and decline, indicating that the inventory pressure on dealers is still relatively large.

Looking at the brand types, the market pressure on luxury and imported brands is prominent, with the inventory early warning index at 66.4%, mainstream joint venture brands at 60.8%, and independent brands at 61.5%.

At the same time, the GP1 (gross profit margin of the purchase and sale difference) of luxury brands has declined from -22.0% to -24.2%, and combined with the performance of the inventory coefficient, it shows the intensity of competition among luxury car market dealers.

The direct bidding between high-end products of luxury and joint venture brands, coupled with the impact of high-end new energy products, further reduces the profitability of the luxury brand market.

In the view of Gao Xiang, President and CEO of BMW Group Greater China, and Director of BMW (China) Investment Co., Ltd., only by stabilizing the dealer network and ensuring that partners have a long-term healthy and sustainable state can success be achieved in the fiercely competitive Chinese market.

"To have a very reasonable sales target and sales rhythm, allowing dealers to develop healthily and sustainably, this is our goal.

BMW complies with the relevant provisions of the anti-monopoly law, and the final market terminal price is made independently by dealers.

However, from the perspective of dealers, they will have a very clear business consideration and will make judgments based on actual financial conditions, ultimately achieving a good balance between sales quality and price strategy."

Gao Xiang said.Price wars have been waged for nearly a decade.

The essence of a price war is a competitive strategy where companies vie for market share by reducing the prices of their goods, typically occurring in industries with market saturation and severe product homogenization.

From 2000 to 2010, there were virtually no price wars; automakers would only conduct normal promotions during the "Golden September and Silver October" because that period was the golden decade for the popularization of cars in China.

As the Chinese car market matured further, from 2010 to 2015, although joint venture vehicles still dominated the market, consumers began to make more detailed comparisons in terms of products, leading to further price reductions in terminal sales.

After 2015, with the rise of the SUV market, joint venture car companies competed fiercely in this sector, with high-premium brands even selling at a premium, such as the Lexus NX and RX series, and the Guangzhou Toyota Highlander.

However, domestic brands developed rapidly, with models like the GAC Motor GS4 and Great Wall Haval H6 coming on strong, forcing joint venture brands to lower prices, and even simplify configurations, such as many joint venture brand SUVs launching two-wheel-drive models and Class A models to further lower the price threshold of their products.

As the Chinese car market transitions from a market of growth to one of stock, the price war among joint venture car companies began nearly a decade ago.

Second-tier luxury joint venture brands sought sales growth through "price wars," not only leading to an overall upward trend in luxury car market sales that year, reshaping the structure of that segment, but also making the trend of luxury brands becoming more "mass-market" increasingly apparent.

However, the price war has spiraled out of control, with the conflict spreading throughout the entire joint venture market and the timeline stretching longer, causing damage to the brand premium of joint venture car companies, new car price inversion, the collapse of the second-hand car price system, and a slump in sales.

There are no winners in this price war; both automakers and dealers are severely affected.

Liu Yingzi, the president of the National Federation of Industry and Commerce Automobile Dealers Association, publicly stated, "Market competition primarily based on price is still ongoing, and the industry's excessive internal competition is intensifying.

Under the influence of various factors such as new car price inversion, declining brand sales, and others, the business operations of the majority of car dealers face tremendous pressure, and anxiety continues to spread."

It's not that they can't afford to compete, but it's not worth it.

The automotive industry chain includes every link from raw materials to the after-sales market, involving multiple cost factors.

If one link breaks, it will inevitably lead to serious adverse consequences, so being deeply involved in a price war is not a long-term solution.

Adjusting the terminal price is beneficial for the healthy development of the automotive industry and the industry chain.

After all, cars compete on a combination of strength in technology, service, and product quality, not just on price factors.

Market share is a pure zero-sum game; every percentage point increase or decrease means taking food from the tiger's mouth.

Some people from joint venture car companies have said that price wars are like playing cards; when someone plays a card, you have to follow, or you will be out.

"Due to the different scales and situations of each company, especially joint ventures, many suppliers and core technologies are controlled by foreign parties, and they do not want the price war to continue, thinking that it is not worth further squeezing costs on the supply chain."

The aforementioned enterprise personnel said.

In fact, compared to the short-term reduction in profits of car brands, corporate executives are more reluctant to see malicious competition among dealers, a decline in service quality, and the direct negative impact on brand value due to price reduction promotions.

Therefore, the health of the channel is the key to the health and upward development of the entire system.

Only by reducing the burden on dealers, adjusting their inventory levels to a reasonable range, and ensuring the cash flow of dealerships can the negative impact of the price war be gradually reversed.

Subsequently, through a series of strategic adjustments within the company, the stable operation of the entire system can be ensured, and systemic risks can be avoided.

It is not difficult to understand why joint venture car companies are starting to withdraw from the price war, even at the cost of losing some market share.

In an increasingly competitive car market, the price war is no different from drinking poison to quench thirst.

The Chinese car market needs innovative marketing models more urgently than ever before.

Shen Jinjun, the president of the China Automobile Circulation Association, said that in the long run, the sales service model centered on customer needs, through the innovation and support of financial tools, will truly activate consumer demand and ultimately promote a win-win situation for users, brands, dealers, and the second-hand car market.

Car manufacturing is not a 100-meter sprint but a marathon.

It relies not on quick and short-term gains but on accumulation and following market rules.

Only in this way can we take one step at a time and move forward steadily, which is the basic concept of long-termism.