China tells carmakers to keep price war away from export markets

[BEIJING] China told its carmakers to keep their cut-throat competitive actions, like steep price cuts, away from overseas markets as manufacturers increasingly look abroad for growth to counter a domestic slowdown. 

Automakers should avoid frequent and substantial price fluctuations that could harm consumer interests and damage brand image, the Ministry of Commerce and two other agencies said in a 20-point document released on Tuesday (Sep 1). Companies should respect the right of local dealers and agents to set prices and follow through with reasonable agreements on sales incentives, they said.

The guidelines add to a suite of rules aimed at safeguarding the image of Chinese auto brands as regulators seek to manage the fallout of a prolonged price war. Years of intense domestic competition has sparked concerns that growth may come at the expense of safety and quality, risking a major reputational hit just as China’s carmakers push into overseas markets like Europe.

Automakers’ aggressive pricing strategies, a longstanding feature of the domestic market, have previously raised eyebrows. In 2024, Thailand investigated BYD dealers over discounts in the wake of consumer complaints. Chief executive officer Wang Chuanfu pledged that the company would be more sensitive about pricing changes, and Reuters reported that the probe cleared BYD of wrongdoing. 

As well as pricing, China’s new guidelines instruct companies to enhance safety management at overseas production sites, including improving emergency response plans for accidents. BYD has faced scrutiny over working conditions in both Hungary and Brazil, with the company previously saying that it follows local laws and regulations.

The guidelines will be applied by the Ministry of Commerce together with the Ministry of Industry and Information Technology and the state market regulator. The document didn’t specify how they’ll be enforced. BLOOMBERG