The China Association of Automobile Manufacturers (CAAM) on Saturday urged the auto industry to end aggressive price wars, cautioning that such practices threaten the sector’s stability and long-term growth. The appeal follows intense debates among key executives over pricing pressures triggered by significant discounts offered to consumers.
“Since May 23, a certain automaker has taken the lead in launching a substantial price drop campaign… triggering a new round of price war panic,” the China Association of Automobile Manufacturers said in a statement.
The statement noted that unchecked price wars have escalated fierce competition, squeezing corporate profit margins and negatively impacting product quality and after-sales service guarantees.
China’s Ministry of Industry and Information Technology (MIIT) stated that it will ramp up efforts to address excessive competition in the auto industry, to strengthen regulatory oversight and maintain a fair and structured market environment.
The statement highlighted that despite the rapid expansion of China’s NEV industry, with NEVs making up over 40% of new car sales, profitability has recently declined. The downturn is largely attributed to the rise of excessive competition characterized by chaotic price wars.
The association has outlined that all companies must adhere to fair competition principles and comply with legal regulations. Leading firms should not suppress competitors or violate the rights in pursuit of market monopolization.
Furthermore, the statement reiterated that while companies may lawfully reduce prices to clear inventory, they should refrain from selling products below cost or employing misleading advertising tactics. Such practices not only destabilize market order but also undermine the fundamental interests of both the industry and its consumers.
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