Price war in China: Volkswagen defies convention with the ID.3 at €16,000 !

The price war in China is experiencing a new twist with the announcement of Volkswagen. Despite the agreement between the manufacturers to end this war, the German manufacturer offers the ID.3 at an aggressive price of 16,000 euros, a discount of 22.7%. This decision raises questions about compliance with the pact and jeopardizes the profitability of certain brands.

The ID.3 at €16,000 in China compared to €42,990 in France 

Volkswagen has chosen to adopt an aggressive pricing strategy for the entire ID range in China. This initiative follows the price cuts made by several manufacturers in recent months. In January 2023, Tesla got the ball rolling by offering the base version of the Model 3 at 32,000 euros. Chinese manufacturers then followed this trend, with BYD readjusting the prices of its Seal and Nio adopting a general reduction of 4,000 euros across its entire range in June.

Volkswagen, through its joint venture with the Chinese group SAIC, is launching a limited series of 7,000 ID.3 vehicles in China, offering two versions at 16,000 euros and 19,000 euros, representing respective reductions of 22.7% and 21.9%. This creates a significant gap with European prices, where the ID.3 starts at 42,990 euros (before the application of the 5,000 euro bonus). Additionally, FAW-Volkswagen, another Volkswagen joint venture in China, is also offering deep discounts on select models to celebrate FAW Group's 70th anniversary.

Volkswagen violates the manufacturers' pact 

Volkswagen's decision to offer aggressive pricing in China comes just after signing a "compact between manufacturers" aimed at ending the price war. This initiative raises concerns about the profitability of competing brands such as Nio and Xpeng, whose recent results have not been satisfactory. The Chinese government, from Beijing, disapproves of this price-based competition game.

At the China Auto Forum 2023 held in Shanghai from July 5-7, an official from China's Ministry of Industry and Technology said players in China's auto industry should not compete on price. abnormal. In response, 16 automakers, including Volkswagen, signed a joint statement to end the price war. Although this pact has no legal or binding value, it advocates a return to "healthy competition with normal prices". However, Volkswagen's recent announcement suggests that honoring this agreement will not last long.