(ECNS) -- China's auto industry was urged to halt price wars, as they may threaten the sector's health and sustainable development.
On May 23, a car manufacturer announced limited-time price cuts on its models, with the maximum discount reaching 53,000 yuan (about $7356.72). Shortly after, multiple automakers followed suit, triggering industry-wide panic.
On May 26, automotive stocks in both the Hong Kong and A-share markets saw a broad decline, with major listed automakers experiencing single-day share price drops exceeding 5%.
The Ministry of Industry and Information Technology (MIIT) stated that disorderly price wars among companies are a typical "cutthroat competition," which not only affects product quality, performance, and service standards but also harms consumer rights and jeopardizes the healthy and sustainable development of the industry.
The China Association of Automobile Manufacturers (CAAM) said that continuous investment is essential for after-sales service and corporate innovation development. However, price wars will severely disrupt normal business operations, threaten the security of industrial and supply chains, and push the industry into a vicious cycle.
In 2024, the profit margin of China's automotive industry stood at just 4.3%, which further declined to 3.9% in the first quarter of 2025, below the average level of the manufacturing sector.
An Tiecheng, chairman of China Automotive Technology and Research Center Co., Ltd., pointed out that the automotive industry is trapped in a cycle of repetitive price reductions, with profitability significantly weakened and difficulties in breaking through existing technological or market bottlenecks, posing challenges to cultivating their global competitiveness.
To curb price wars in the auto industry, the CAAM issued four proposals on Friday, calling for all car makers to adhere to the principles of fair competition, conduct self-inspections, and rectify any practices that violate relevant national laws and regulations.
The MIIT on Sunday announced it would intensify efforts to curb "cutthroat competition" in the automotive sector by promoting industrial restructuring and optimization, cooperating with relevant authorities on anti-unfair competition enforcement, implementing necessary regulatory measures, and other measures.
Car makers should focus more on R&D innovation, delivering superior services to users, and advancing new technological developments, Dong Yang, former executive vice president and secretary-general of the CAAM said.
(By Zhang Dongfang)
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