AutoBeta(AutoBeta.net)07/21 Report--

With the decline of brand premium and the gradual decline of product competitiveness, SAIC Skoda has finally ushered in a piece of good news. On July 21, SAIC Skoda announced the completion of production of its 3 millionth vehicle. Since SAIC Skoda's first domestic model, Ming Rui, was launched in June 2007, the brand has been operating in the Chinese market for 13 years.

The decline in sales and development difficulties of SAIC Skoda have become a major obstacle to Volkswagen's business in China, but Volkswagen has not given up its plans. Feng Sihan, CEO of Volkswagen Group (China), said recently, "Skoda launched a series of measures in late May and early June, such as new communication and promotion methods, pricing methods and so on. Skoda is located in a highly competitive market, with both local and international brands competing. We are cautiously optimistic about Skoda's prospects for the second half of the year.

SAIC Skoda brand has been hovering in sales of 330000 vehicles from 2016 to 2018, but as the market ebb and competition intensifies, brand differentiation gradually highlights, Skoda falls into the plight of marginalization. Even though SAIC Skoda has strengthened its SUV product layout in recent years and launched two SUV models, Cormick and Klock, it has not actually brought significant growth to Skoda's sales in China.

Skoda sold 282000 vehicles in China in 2019, down 17.3% from a year earlier, according to the data. Skoda had previously set an annual sales target of 500000 vehicles. Skoda continued its downward trend in the first half of 2020, with sales of only 77400 vehicles, a sharp drop of 38.5 per cent. Skoda suffered a more severe blow under the influence of the epidemic.

In the environment of stock competition, the Chinese automobile market is gradually concentrated to the head brand, and the second-and third-line joint venture brands are facing the fate of competitive differentiation or even elimination. Due to market pressure, SAIC Skoda finally chose to reduce the price.

"exchanging price for quantity" and "reducing price for survival" have become the way for many joint venture brands to survive in the Chinese market. In April this year, SAIC Skoda announced that all models of its nine major cars would have their guidance prices cut, with a maximum reduction of 24500 yuan. Among them, the Kodiak guidance price was adjusted to 17.79-247900 yuan, a decrease of 1.05-24500 yuan; Skoda Express Group was adjusted to 15.49-229900 yuan, a decline of 1.0-15000 yuan; and the price of Mingrui was reduced to 9.99-149900 yuan, a decline of 11500 yuan. SAIC Volkswagen Skoda also became the first auto company to announce a government reduction in 2020.

According to the official statement, the official downgrade measure is mainly to abandon the burden of the "cheap masses" and to narrow the gap between the guidance price and the market terminal price.

The living environment of second-and third-line joint venture brands is getting worse and worse. An executive of an automobile company once analyzed that "the achievements of second-and third-tier joint venture brands in the Chinese market over the past decade are closely related to the enterprise's own technical strength, model strategy and marketing." but the most fundamental driving force is the market dividend brought by the explosive growth of the Chinese market, but with the market ebb, the upward offensive of independent brands is obvious. The shortcomings of these brands in product strategy, market decision-making and marketing are gradually exposed, and finally show a declining trend. "

2020 will be a sluggish year for SAIC Skoda sales. At present, whether the price reduction can bring sales growth, the actual effect remains to be tested by the market.

Welcome to subscribe to the WeChat public account "Automotive Industry Focus" to get the first-hand insider information on the automotive industry and talk about things in the automotive circle. Welcome to break the news! WeChat ID autoWechat