Overview

• China’s Ministry of Industry and Information Technology and the China Association of Automobile Manufacturers have publicly called for an end to ‘brutal price wars’ in the domestic auto market.
• The renewed price war was sparked on May 23 when BYD offered discounts and government trade-in subsidies on more than 20 electric vehicle models.
• Competitors including Geely Auto and Stellantis-backed Leapmotor quickly matched BYD’s incentives with limited-time trade-in subsidies on select models.
• CAAM warned that selling vehicles below cost or engaging in ‘disorderly’ competition undermines profitability and market efficiency.
• Industry executives have cautioned that continued aggressive pricing could erode profit margins, destabilize suppliers and jeopardize the sector’s sustainable growth.