China Auto Association Urges Halt to Price Wars Amid Fears of Industry Instability

A leading Chinese automotive industry group has called for an end to intensifying price wars among carmakers, warning that deepening competition could harm consumers, squeeze profits, and derail the sector’s long-term growth.

The China Association of Automobile Manufacturers (CAAM) issued the warning in a statement on Sunday, expressing concern over aggressive price cuts initiated by “a certain automaker” on May 23, which have since been matched by several competitors. Though the association did not name the company, industry observers have pointed to BYD as the likely initiator of the recent wave of discounts across dozens of models.

“Unregulated price wars have intensified cutthroat competition, further squeezing corporate profit margins, which in turn affects product quality and after-sales service guarantees,” CAAM said. “This not only hinders the industry’s healthy development but also harms consumer rights and poses safety risks.”

The association’s statement follows weeks of price reductions across the new energy vehicle (NEV) segment, with BYD’s price campaign prompting responses from rivals including Chery and Leapmotor. The growing discount battle has raised concerns over sustainability in a sector where profitability has already been under pressure.

“Currently, the industry as a whole is showing a stable and positive trend, with market vitality continuing to be released,” CAAM noted, pointing out that NEVs now make up over 40 percent of new vehicle sales in China. However, it warned that “disorderly price wars” are threatening to undermine this progress.

The association urged automakers to shift focus toward investing in innovation, quality assurance, and customer service. “This also undermines the security of the industrial chain and supply chain, pushing the industry into a vicious cycle,” the statement said.

The remarks underscore rising tension within China’s competitive EV landscape, where companies are grappling with slowing demand growth, margin compression, and the need to differentiate through technology and service rather than price alone.