In the second half of the year, the price of cars “drops”

According to statistics released recently by the National Bureau of Statistics, the national consumer price index (CPI) in the first half of this year increased by 5.4% year-on-year. In contrast, the automotive industry is completely another picture. The National Development and Reform Commission price monitoring center announced the monitoring results of the prices of cars in 36 large and medium-sized cities across the country. The results show that the domestic auto prices in the first half of the year have dropped by 1.16 from the same period of last year. %. As for the trend of car prices in the second half of the year, the industry has split its views on “bullish”, “bearish” and “maintaining stability”. The magazine believes that the possibility of continued downward exploration of prices in the second half of the year is relatively large, but the decline in vehicle prices may not become a major factor affecting consumer car purchase decisions. Instead, it is a rising CPI, which has become a “curse” that restricts auto sales.

CPI continues to record high prices, and the price of cars cannot stop falling—this is the reason for the “bullish” people. It is believed that as the price of auto raw materials increases, the price of automobiles will inevitably be affected. However, in fact, the increase in production costs will not easily drive up the price of the car. The factors that determine the price of the car are various. In addition, from the perspective of automobile manufacturing costs, in addition to steel and other raw materials, including many electronic components, the current price of electronic components has not changed, so the impact of CPI on the vehicle price is still limited.

Another important factor is profit. According to the China Association of Machinery Industry and China Association of Automobile Manufacturers in June, the data released by the top 30 companies in the Chinese auto industry in 2010 showed that last year’s car companies’ revenue and earnings both increased significantly. The income of the six car owners' main business exceeded RMB 100 billion. One thing to note is that no matter how car companies are clamoring for price wars, cars are still highly profitable commodities in China, and a large amount of spilled profits is enough to support car companies to resist CPI pressure.

In addition, we have seen that in the context of the expansion of production by manufacturers, the auto market has entered a situation where supply exceeds demand. On the one hand, as manufacturers increase production, the cost will be reduced accordingly, which will offset the impact of the increase in CPI. At the same time, large enterprises can have a certain amount of bargaining power due to a large number of purchases, plus they will be able to absorb a lot of cost reductions, push new models, and so on, so they will have greater room for price cuts. On the other hand, oversupply will make consumers face more. The increase in inventory, inventory, and end-market (dealer) price pressures will inevitably enter a “price-reduction cycle,” which is why prices may continue to fall in the second half of the year.

However, under the continuous rise of the CPI, the car prices have affected the trend of the auto market, or the influence on consumer decision-making has been reduced a lot. This may explain why the car prices are not falling and consumers do not buy it. Cars are special bulk consumer goods. Inevitably, it will be profoundly affected by the macro economy. The increase in CPI will not easily increase the domestic vehicle price. However, due to rising fuel, spare parts prices, and parking fees, the cost of keeping and using cars after consumers buy cars is still increasing. The price of various materials may have accelerated the upward trend. Under the circumstances that the actual income is not expected to be optimistic, although the price of the vehicle is decreasing relative to other commodities, it is calculated for passenger vehicles, which are consumables. There will be more and more people who have reasonableness and practicality, so more consumers have chosen to hold a coin for purchase. This is the real impact of CPI on the auto market.