Why Are Domestic Cars Cheaper Than Joint Venture Cars?
2 Answers
There are many reasons why domestic cars are cheaper than joint venture cars. The following is a detailed introduction to the reasons: 1. Differences in the three major components: The three major components of a car consist of the transmission, chassis, and engine. Domestic cars started developing these components relatively late, so there is inevitably a significant gap in quality compared to joint venture cars. As a result, domestic cars can only compete on price to attract consumers. If domestic cars were priced similarly to joint venture cars, their sales would undoubtedly suffer. 2. Brand effect: Many consumers do not prioritize car performance when purchasing a vehicle but rather focus on the influence of the car brand. The brand influence of joint venture cars is significantly higher than that of domestic cars, and joint venture cars also invest much more in advertising. Joint venture cars indirectly pass on the cost of advertising to the price of the cars we buy. Excessive advertising also leaves a deeper impression in our minds, leading us to prefer joint venture cars when making a purchase, under the assumption that joint venture cars are inherently better.
As a veteran driver with over a decade of experience, I've observed that the affordability of domestic cars mainly comes from cost control. China's labor market offers lower wages, and localized production saves a significant chunk on labor costs. Material supplies are also mostly domestically sourced, with locally procured steel and plastics eliminating import tariffs. Unlike joint-venture cars that share profits with foreign companies and pay technology licensing fees, domestic cars rely on mature platforms to save on R&D investments and achieve economies of scale through mass production, adopting a high-volume, low-margin strategy. I've driven Great Wall cars and found their performance stable, with their price advantage making them highly popular. Despite being affordable, the quality has improved rapidly, and maintenance costs are economical, making them very practical for daily use. Joint-venture brands carry higher premiums, with some premium features adding to the price. Domestic automakers can quickly respond to market demands, reducing inventory pressure and further driving down prices.
