As BYD's discounting offensive on new cars creates chaos in the Chinese electric vehicle market, there is a forecast that Hyundai Motor will be affected in the domestic market. This is because BYD is likely to significantly lower new car prices overseas to dispose of inventory, which may cause domestic companies to struggle in price competition.
According to the automobile manufacturing industry, BYD has been applying double-digit discount rates to 22 types of electric vehicles and plug-in hybrid vehicles sold in China since last month. Accordingly, the price of its flagship model, the mid-size sedan Seal, has decreased by up to 34%, and the small electric hatchback model Seagull is also on sale with a 20% discount.
As BYD, the top player in the Chinese automobile industry, launched a dramatic discount offensive, Chinese competitors have also moved to discount sales. Chery Auto reduced prices on 31 models by up to 47%, while other major automakers such as Geely Auto, Changan Automobile, and Shanghai GM are also applying double-digit discount rates in their sales.
As the discount competition initiated by BYD began to resemble a "chicken game" in which one side competes until it suffers to win, authorities eventually stepped in. The Ministry of Industry and Information Technology of China reportedly called in representatives from major electric vehicle manufacturers, including BYD, to express that "excessive discount competition is an act of self-harm that harms the entire industry" and indicated a desire to crack down on it.
In the domestic automobile industry, there are many opinions that BYD is likely to significantly lower prices for new cars released in overseas markets, including Korea. BYD must clear out a large stock to improve its worsened financial health, and given that authorities in China have hinted at intervention, it ultimately has no choice but to lower prices to increase sales abroad.
While the exact scale of BYD's liabilities is not known, major foreign media estimate that it may be in the tens of trillions of won. Earlier this year, Bloomberg reported, citing data from the Hong Kong accounting firm GMT Research, that BYD's net liabilities as of the second quarter of last year reached 323 billion yuan (approximately 62 trillion won).
BYD's Korean corporation, BYD Korea, reportedly has no plans for discount sales on the small sports utility vehicle (SUV) Atto 3 currently sold in Korea. However, the imported car industry anticipates that new cars released in the second half of the year will likely be priced lower than initially expected.
BYD is set to unveil its successor model, the Sea Lion 7, in the second half of this year. This vehicle is projected to attract more attention than the Atto 3, as it is the most demanded mid-size SUV in Korea. If the Sea Lion 7 is released at a low price, the Hyundai Motor Ioniq 5, competing in the same vehicle class, could take a significant hit.
Recently, some consumers in BYD's large domestic community are sharing information that the Sea Lion 7 will be released at a low price in Korea. One community member posted that they received a call from a BYD sales representative saying that the all-wheel-drive version of the Sea Lion 7 is expected to be priced in the early 40 million won range in August.
The long-range all-wheel-drive model of the Ioniq 5 is being sold for 53.07 million to 61.32 million won. Initially, there was much expectation in the imported car industry that the price of the all-wheel-drive version of the Sea Lion 7 would be set lower than the Ioniq 5, in the early 40 million won to early 50 million won range. If it is released in the early 40 million won range as per community information, the price difference with the Ioniq 5 would widen to between 10 million and 15 million won.
Hyundai Motor and Kia have been facing poor electric vehicle sales as a result of ongoing electric vehicle chasm in recent years. Last month, the domestic sales volume of the Ioniq 5 was 1,255 units, a decrease of 21.1% compared to the same month last year. If BYD significantly lowers its domestic sales prices, as some participants in the imported car industry predict, the demand for electric vehicles from Hyundai Motor and Kia is expected to decline further.
An official from the automobile manufacturing industry stated, "In China, the Sea Lion 7 is available for about 28 million won with a discount rate of around 30%. The domestic launch price will be set higher than in China, but BYD may lower prices more substantially than expected to expand its market share."