China's market supervision authorities have drafted a consultation paper on automobile pricing, aiming to regulate pricing and sales behaviors to prevent automakers from selling vehicles at excessively low prices, thereby curbing deflationary pressures brought about by fierce competition.

The State Administration for Market Regulation (SAMR) of China released the Guidelines for Price Compliance in the Automobile Industry (Draft for Comment) on Friday (December 12), putting forward price compliance requirements for the production, pricing strategies and sales behaviors of complete vehicles and parts. It also solicited public opinions, with the deadline for feedback set for December 22.

SAMR pointed out that in recent years, the automobile production and sales sector has seen problems such as non-standard price marking, price fraud, price collusion and irrational competition, which have seriously disrupted the market order and infringed upon the legitimate rights and interests of consumers and operators.

According to the draft, automobile sales must have clearly marked prices, and no promotion shall be conducted in the name of false "market prices" or "clearance prices". The document also clarifies that automakers will face legal risks if they sell products at prices below production costs with the intent to eliminate competitors or monopolize the market.

The China Association of Automobile Manufacturers interpreted that this is expected to improve the price transparency of automobile products. Many automakers including BYD, BAIC Group and XPeng Motors have also expressed support for the draft, stating that they will strengthen compliance management and strictly avoid price fraud and unfair competition.

China's regulators have stepped in to regulate automobile prices at a time when price wars are intensifying and the industry is facing the dual pressures of overcapacity and weak demand. AlixPartners, a consulting firm, pointed out that the number of brands selling electric and plug-in hybrid vehicles in the Chinese market has plummeted from about 500 to around 129 in recent years, and it is expected that only more than a dozen brands will have sustainable financial capabilities by the end of this decade.

China's market supervision authorities have drafted a consultation paper on automobile pricing, aiming to regulate pricing and sales behaviors to prevent automakers from selling vehicles at excessively low prices, thereby curbing deflationary pressures brought about by fierce competition.

The State Administration for Market Regulation (SAMR) of China released the Guidelines for Price Compliance in the Automobile Industry (Draft for Comment) on Friday (December 12), putting forward price compliance requirements for the production, pricing strategies and sales behaviors of complete vehicles and parts. It also solicited public opinions, with the deadline for feedback set for December 22.

SAMR pointed out that in recent years, the automobile production and sales sector has seen problems such as non-standard price marking, price fraud, price collusion and irrational competition, which have seriously disrupted the market order and infringed upon the legitimate rights and interests of consumers and operators.

According to the draft, automobile sales must have clearly marked prices, and no promotion shall be conducted in the name of false "market prices" or "clearance prices". The document also clarifies that automakers will face legal risks if they sell products at prices below production costs with the intent to eliminate competitors or monopolize the market.

The China Association of Automobile Manufacturers interpreted that this is expected to improve the price transparency of automobile products. Many automakers including BYD, BAIC Group and XPeng Motors have also expressed support for the draft, stating that they will strengthen compliance management and strictly avoid price fraud and unfair competition.

China's regulators have stepped in to regulate automobile prices at a time when price wars are intensifying and the industry is facing the dual pressures of overcapacity and weak demand. AlixPartners, a consulting firm, pointed out that the number of brands selling electric and plug-in hybrid vehicles in the Chinese market has plummeted from about 500 to around 129 in recent years, and it is expected that only more than a dozen brands will have sustainable financial capabilities by the end of this decade.