The authorities are calling on the automotive industry leaders to refocus on innovation and quality-driven advancement rather than price competition.
China's auto industry association has sounded the alarm on cutthroat competition, urging market leaders not to seek monopolistic control amid an escalating price war in the electric vehicle sector.
In a notable intervention over the weekend, the China Association of Automobile Manufacturers, or CAAM, issued a formal directive about fair competition, directly challenging the intense price rivalry that has eroded industry profitability. The Ministry of Industry and Information Technology, or MIIT, immediately endorsed the initiative, signaling government-level concerns over the current market dynamics.
"Advantaged companies should not seek to monopolize the market by squeezing the survival space of other entities or harming the legitimate rights of other operators,"
the association declared, establishing clear boundaries for competitive behavior.
It said that companies should lawfully cut prices to manage inventory, but not dump products at below-cost prices or engage in false advertising that misleads consumers.
The industry body also called on all market participants to observe fair-competition principles and conduct self-examination to correct any problematic practices in accordance with national regulations.
CAAM highlighted that new energy vehicles now capture more than 40 percent of new vehicle sales in China, marking tremendous growth for the sector. However, this positive trajectory is being undermined by a price war that began on May 23, when an unnamed automaker initiated sharp price cuts that triggered a domino effect across the industry.
Meanwhile, MIIT cautioned that price wars deplete resources needed for research and development, potentially degrading product and service quality while introducing safety risks — concerns that align with CAAM's warnings about market sustainability.
The ministry promised to intensify efforts against what Beijing terms "involution-style" competition in the auto industry. It urged a market reorientation toward innovation and quality-driven advancement.
Specific measures will include improving industry structure, stepping up product inspections and launching enforcement action against unfair competition jointly with other regulators, the state-run People's Daily cited the MIIT as saying.
Chinese authorities have consistently signaled their determination to curb counterproductive "involution-style" competition. This policy focus was highlighted at a Politburo meeting in July last year, and reinforced in both the 2024 Central Economic Work Conference and this year's Government Work Report.
Similar market tensions are occurring among online food delivery platforms. Last month, the State Administration for Market Regulation disclosed that it had coordinated with four other agencies to summon executives from JD.com, Meituan and Alibaba's Ele.me, after JD's entry into food delivery sparked a fierce subsidy war.
Source: MLex
