The recent landscape of the automobile market has sparked considerable reflection among industry stakeholdersOnce proud contenders in the segment of second-tier luxury brands, companies like Lincoln and Infiniti are now grappling with a significant transformation brought about by the influx of domestic electric vehicle (EV) brandsThe sales figures for 2024 signal alarming trends, with these iconic brands witnessing a sharp decline in market share, highlighting a dramatic shift in the competitive dynamics of the Chinese automotive market.
A crisis in sales has underscored a pressing dilemma
As we analyze the sales data for November 2024, Lincoln's performance reveals a stark reality: a mere 4,251 units were sold, marking a staggering drop of 37.2% year-on-yearThis performance pales in comparison to more established players like BMW, Mercedes-Benz, and Audi, leaving Lincoln defenseless against the surging domestic electric competitors such as NIO, XPeng, and Li AutoWhat once labeled Lincoln as a second-tier luxury brand is now a rapid descent towards market irrelevance.
Infiniti appears to be in an even more precarious situationIn a desperate attempt to recover sales, the brand has implemented drastic price reductionsThe QX50 was slashed from 350,000 yuan to 199,800 yuan, and the Q50L saw its price plummet from 264,800 yuan to 172,100 yuanNevertheless, despite these efforts, Infiniti's accumulated sales for the first eleven months only reached 2,132 units—a staggering year-on-year decline of 62.23%. The drastic measures taken in such a short period reflect the diminishing appeal of brands that once thrived on their luxury cache.
Market dynamics and the "dimensionality reduction" by BBA
The plight of second-tier luxury brands is further compounded by the aggressive strategies employed by the top-tier brands known as BBA (BMW, Benz, Audi). These giants have initiated a fierce price war to capture market share, with the BMW 3 Series now starting at 230,000 yuan, while the Audi Q5L has dropped by 150,000 yuan
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In such a landscape, consumers are naturally drawn to the stronger brand influence and comprehensive product offerings of the BBA, overshadowing the appeal of the struggling second-tier luxury brands like Lincoln and CadillacWhile certain niches may still recognize their presence, the overall brand power and product offering of these brands falter in comparison.
The "reverse dimensionality reduction" from domestic new energy brands
The rise of domestic EV brands plays a crucial role in the declining market share of these once-prominent luxury brandsCompanies like NIO, Li Auto, and XPeng have made substantial strides in innovation, product strength, and consumer serviceNotably, NIO's unique battery swapping stations and complimentary charging services have alleviated concerns over range anxiety, while community-building efforts have fostered a dedicated consumer baseLi Auto's L7 and L8 models have emerged as popular choices among middle-class families, thanks to their impressive price-to-performance ratios and advanced features.
Unlike traditional gasoline vehicles, domestic EV brands have excelled not only in enhancing product performance but also in areas of intelligence, technology, and overall user experienceMany second-tier luxury brand vehicles struggle to compete with domestic brands in terms of technological innovation, feature richness, and cost-effectivenessMore than just meeting the price-performance expectations, these domestic EV brands have cultivated consumer loyalty through innovative services that resonate with consumers.
Navigating an awkward position
The position of second-tier luxury brands becomes increasingly precarious in light of BBA's aggressive pricing and the ascendancy of domestic EV brands
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These brands previously attracted consumers primarily through luxury feel and brand equity, but in the current era of new energy vehicles, such elements are losing their magnetic pullModern Chinese consumers are more focused on aspects like vehicle performance, technological integration, and value for money.
For instance, the Volvo EX90 comes with a starting price of 568,300 yuan, a figure at which a consumer could easily opt for domestic models such as the AITO M9 or Li L9. These domestic models not only offer superior performance and technological features but are also more accessible price-wiseWhile brands like Volvo still boast an aura of luxury and brand influence, consumer choices have undergone a fundamental shiftMarket conditions reveal that second-tier luxury brands frequently exhibit weaknesses, lacking the brand recognition required to compete with BBA while attempting a mass-market approach without the scale necessary to leverage pricing advantagesThe future for these brands is fraught with uncertainty.
Seeking pathways for survival and growth
In the face of fierce competition, second-tier luxury brands must adopt effective strategies to maintain their presence in the Chinese marketFirstly, an increase in investment in the new energy sector is essential, aligning with trends toward electrification and intelligent technology, and rolling out electric or hybrid models that meet market demands—relying solely on traditional gasoline vehicles is no longer viable.
Secondly, these brands must revisit their pricing strategies
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