Perhaps even BMW didn't anticipate that after withdrawing from the price war, they would face a Waterloo.

In August of this year, BMW's sales volume in the Chinese market was 34,800 units, a staggering year-on-year drop of 42%.

To put it in perspective, BMW's sales in China were 55,600 units in June and 49,000 units in July this year.

It's evident that BMW's sales are getting worse.

In a nutshell, BMW isn't selling well anymore!

Some might argue that BMW is simply not too keen on being overly competitive and has chosen a strategic retreat.

But is that really the case?

On September 10th, BMW Group announced a downward revision of its financial guidance for the fiscal year 2024.

"In terms of sales volume, it has been adjusted from a slight increase to a slight decrease; in terms of profit, the EBIT margin has been reduced from 8%-10% to 6%-7%; in terms of return on investment, it has been reduced from 15%-20% to 11%-13%."

In fact, BMW's profitability has been deteriorating.

In the first half of this year, BMW's automotive business revenue was €63 billion, a slight year-on-year increase of 0.2%, but the net profit was only €5.656 billion, a year-on-year decrease of 14.6%.

It should be added that in 2023, BMW's operating revenue increased by 9% year-on-year, but the net profit plummeted by 34.5%.

The main reason is the pressure on sales volume.

In the first half of this year, BMW's sales in China fell by 4.3%, and it was only due to the European and American markets that the revenue was barely positive.

However, the fierce price war has led to a deterioration in BMW's profitability.

Note that the situation in the third quarter may be even worse.

As mentioned earlier, BMW's sales volume in the Chinese market in August was 34,800 units, a year-on-year drop of 42%, and sales have been declining for two consecutive months.

Therefore, the sudden drop in sales combined with the price war, coupled with huge maintenance costs such as integrated braking systems, BMW's operating performance in the third quarter may further deteriorate, and it may be worse than expected.

It's not just BMW; the entire "BBA" (BMW, Benz, Audi) is in a tough situation.

In the first half of this year, Audi's operating profit fell by 42% year-on-year, and Mercedes-Benz's EBIT fell by 25%, worse than BMW.

What "BBA" didn't expect was that even with the use of price cuts, they couldn't save the decline in sales volume.

As a result, neither sales nor profits, including the high-end image of the century-old luxury brands, were able to be preserved.

According to statistics from China Automotive Research, in the first two weeks of September, BMW's sales volume has been overtaken by Li Auto.

Perhaps Li Auto itself didn't expect to surpass BMW in such a way, not because of its own excellent performance, but because the performance of its peers was too poor.

So, the choice now facing BMW is whether to swallow its pride and lower prices again?

Of course, the result of lowering prices is very likely that in the end, neither sales volume nor brand image may be preserved.

Why are BBA collectively facing this predicament?

The root lies in the slow progress of the three car companies in the transition to electrification!

At the end of 2023, Audi's new CEO stated that in the short term, they will continue to promote internal combustion engines and plug-in hybrid vehicles, and slow down the introduction of pure electric vehicles.

Why such a statement?

There may be several reasons.

First, the growth rate of new energy vehicles in Europe has slowed down, and European car companies need to make a choice between new energy vehicles and traditional fuel vehicles; secondly, as global car companies, BBA needs to balance the development of various regional markets; most importantly, considering the degree of involution in the Chinese market, BBA is not only not advantageous but also at a disadvantage in terms of technology, products, and costs.

If they join the involution camp, their profitability will inevitably deteriorate further.

However, BBA is also unwilling to completely give up the Chinese market.

As a result, Volkswagen made a decision that offended the entire German industry.

In early September, Volkswagen issued a statement considering the closure of one of its car factories and one parts factory in Germany for the first time, and plans to lay off employees, especially R&D personnel, to further reduce expenses.

It's clear to everyone that layoffs are just an excuse.

In December 2023, Volkswagen officially took a stake in Xiaopeng Motors, and the two sides signed a strategic technology cooperation framework agreement; in April this year, the two sides announced that they would jointly develop a new generation of quasi-central electronic electrical architecture CEA; in July this year, the two sides signed a strategic cooperation joint development agreement again.

Volkswagen has thought it through, it's better to seek external cooperation than to develop on its own, which requires a huge amount of investment and slow results, and also delays time.

Let Xiaopeng accelerate Volkswagen's transition to electrification through technology output.

This is also why Volkswagen plans to lay off a large number of employees, especially R&D personnel.

Of course, BMW is not lagging behind.

In April this year, BMW announced an investment of 20 billion yuan to upgrade and technologically transform the Shenyang factory.

In addition, to cooperate with the domestic production of its new "New Generation" models, BMW also plans to invest 10 billion yuan to build the sixth-generation power battery project.

However, unlike Volkswagen, BMW seems to still have illusions about its own capabilities.

What do you think, can BMW overtake in the new energy vehicles?