The automobile industry is facing a significant dilemma, one that underscores the nuances of market dynamics and consumer expectationsAt the "2024 China Automotive Industry High-Quality Development Forum," held on December 12, Han Chun Zhao, the Public Relations Director of FAW-Volkswagen's Jetta brand, articulated a pressing concern: the "internal competition" in the automotive sector primarily stems from oversupply, leading manufacturers to engage in price wars as a desperate maneuver to capture market shareSuch relentless competition, he argues, ultimately harms consumers, who bear the brunt of these strategies.

This forum, themed “Reformation Should ‘Change’ and Innovation Should ‘Renew’,” was not just a discussion about the automotive landscape but a clarion call for a shift in how car manufacturers approach competitionHistorically, sectors such as the internet industry have relied on subsidies to attract customers, a strategy that has left the automotive market grappling with excessive competition driven by price reductions

The situation has spiraled into a vicious cycle where companies are effectively losing money while trying to attract customers with low prices.

As Zhao pointed out, juxtaposed with the fast-paced internet landscape, the automotive industry is endowed with distinct characteristicsThe failure of a car brand incurs substantial social costsWhen car manufacturers lower prices drastically to compete, procurement departments often feel pressured to slash costs, which could lead to compromised product qualityThis eventually becomes detrimental not only to the manufacturers but also to the end consumers, who might not immediately notice the implications of inferior componentsHowever, over time, the impact becomes evident—subpar materials might lead to increased maintenance issues or unsatisfactory vehicle performance.

Zhao highlighted a critical thought: large automotive firms can often absorb costs and continue to thrive in a low-price environment, but smaller manufacturers could face dire consequences when pressured to cut corners

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The result of such practices is a degradation in vehicle quality, ultimately harming the brand's reputation and consumer trustHis emphasis resonates with a broader trend in consumer behavior—purchasing decisions are increasingly influenced by a desire for long-lasting and durable vehicles rather than sleek designs or technological gimmicks.

In a decisive stance, Zhao announced that Jetta would not engage in price warsHe described Jetta as a "small but beautiful" brand, focusing on serving a niche market with a clear understanding of consumer needsJetta customers tend to be practical and discerning, valuing durable and high-quality vehicles over the latest technological advancements or flashy designsBy eschewing the race to the bottom, the hope is to foster a model that prioritizes long-term brand equity rather than short-term gain.

Interestingly, many industry observers have questioned why Jetta has not released new models in several years

Zhao iterates that stringent German automotive manufacturing standards necessitate a comprehensive approach to vehicle development, typically spanning 48 months of research and development backed by rigorous testing protocolsThere’s a notable emphasis on creating vehicles that offer a truly refined experience, akin to the meticulous attention to detail found in brands like Mercedes, which prioritize passenger comfort and a sense of tranquility within the vehicle.

The topic of electric vehicles and their transformation into increasingly smart machines, akin to smartphones, also emerged as a focal point of discussionThe introduction of AI technology into vehicles is touted as the next frontier in automotive evolutionHowever, skepticism remains regarding whether AI will indeed become the defining feature of future intelligent vehiclesZhao acknowledged a tendency within the industry to latch onto buzzwords such as "5G," "blockchain," or "metaverse," which, while momentarily trending, often fade into obscurity.

Moving forward, Zhao believes that while new technologies—including AI—may represent the vanguard of automotive innovation, there remains a core essence and functionality within automobiles that will persist beyond fleeting trends