A DANGEROUS cocktail of intensifying competition, weak consumer spending and sluggish car sales has led to a slew of price cuts in China only extending and deepening – and electric vehicles aren’t necessarily the ones benefiting.

After Tesla kicked off a price war that quickly enveloped other manufacturers earlier this year, now some two-thirds of auto brands in the world’s largest car market are offering discounts. The slashing of prices has become broad-based despite China recently extending tax breaks for consumers buying clean cars through 2027.

Data from China Auto Market, which collects nationwide retail transaction prices from almost 100 brands and 2,800 variants of passenger cars, show pricing for 80 per cent of model variants has dropped from the end of last year through May, with 10 per cent moving higher and the remainder unchanged.

The per cent of transaction price drops of more than 10,000 yuan (S$1,871) within five months has grown to around 36 per cent of car variants. But what’s interesting is who’s swinging the axe the hardest.

According to China Auto Market, it’s state-backed Dongfeng Motor Group and its brand Forthing, with pricing for their car variants on average tumbling 27 per cent and 35 per cent, respectively. Only a handful of brands – such as Cowin Auto, from less prominent player Chery Automobile, and Clever by SAIC Motor – have increased prices.

Legacy brands Jaguar and Land Rover (controlled by the same parent) and Hyundai also stand out for their generous discounts. Tesla and clean-car maker BYD, which recently leapfrogged Volkswagen as China’s best-selling car brand, have meanwhile maintained their price cuts at just above 6 per cent on average across model variants.

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Bloomberg Intelligence autos analyst Joanna Chen says the cuts are part of a broader move to lift overall vehicle sales, given China’s slow economic recovery. “Competition has toughened because supply and production are normalising,” she says. “Pricing is under pressure to sustain volume momentum.”

While EV maker Nio became the latest to make a round of cuts two weeks ago after reporting a worse-than-expected loss, some of the largest individual discounts have been reserved for models, and versions of them, made by Dongfeng and China FAW Group – like the gas-guzzling Hongqi and Forthing.

For Dongfeng, the price cuts appear to reflect a broader defence of a market share that’s been shrinking, considering its lineup is more tied to legacy combustion engine technology.

While China is leading the EV transition, the intensifying competition has exposed legacy auto brands, and not just Volkswagen. Foreign automakers light on electric cars from Japan and Korea are struggling, too.

Consumers willing to open their wallets may be winners in this ongoing price war. But with deeper discounting on fossil fuel cars likely to grow, the same can’t be said for China’s clean-car push. BLOOMBERG