Politburo Pledge to Curb ‘Vicious Competition’ Sparks Hope Auto Price War Will End
Listen to the full version
China’s auto industry welcomed a pledge by the country’s top leadership on Tuesday to curb “vicious competition” across the economy, sparking hopes that the protracted price war in the world’s largest car market may finally subside.
The Communist Party’s top decision-making body vowed at a meeting yesterday to enhance industry “self-discipline” and prevent “the vicious competition of involution.” The Politburo also emphasized the need to “strengthen the market’s ‘survival of the fittest’ mechanism and smooth the exit channels for backward and inefficient production capacity,” according to the state-run Xinhua News Agency.
Unlock exclusive discounts with a Caixin group subscription — ideal for teams and organizations.
Subscribe to both Caixin Global and The Wall Street Journal — for the price of one.
- RELATED
- DIGEST HUB
Digest Hub
Back
- China's leadership pledged to curb "vicious competition" in the auto sector, aiming to address overcapacity and excessive competition.
- A prolonged price war in China's car market led to financial troubles for automakers, including a delisting notice for China Grand Automotive Services.
- Despite aggressive price cuts by companies like BYD, there is no clear evidence of below-cost sales, complicating efforts to end the price war.
- China Grand Automotive Services Group Co. Ltd.
- China Grand Automotive Services Group Co. Ltd., one of the country’s largest auto dealers, received a delisting notice from the Shanghai bourse on July 21 after its stock consistently closed below the 1-yuan threshold.
- Guangzhou Automobile Group Co. Ltd.
- Guangzhou Automobile Group Co. Ltd. (601238.SH) has taken cost-saving measures such as layoffs due to mounting losses. Chairman Zeng Qinghong emphasized the need for automakers to focus on long-term strategies rather than engaging in "involution."
- BYD Co. Ltd.
- BYD Co. Ltd., China's electric-car leader, has been using price cuts since early 2023 to gain market share without selling below-cost. The company achieved a 10.6% profit increase to 4.57 billion yuan ($630 million) in Q1 2024. Recently, BYD's premium brand Fangchengbao reduced SUV model prices by up to 50,000 yuan.
- Early 2023：
- A brutal price war begins in China’s auto sector as sales growth starts to slow.
- Early 2024：
- BYD Co. Ltd. has aggressively used price cuts to grab market share.
- First quarter of 2024：
- BYD Co. Ltd.'s profit rose 10.6% to 4.57 billion yuan ($630 million) according to its earnings report.
- Monday, 2024：
- BYD’s premium brand Fangchengbao cut the price of models under one SUV series by up to 50,000 yuan.
- Tuesday, 2024：
- China’s top leadership made a pledge to curb 'vicious competition' across the economy.
- Yesterday, 2024：
- The Communist Party’s top decision-making body vowed to enhance industry 'self-discipline' and prevent 'the vicious competition of involution' at a Politburo meeting.
- June 2024：
- Guangzhou Automobile Group Co. Ltd. Chairman Zeng Qinghong called on automakers to focus on long-term strategies instead of engaging in involution.
- July 21, 2024：
- China Grand Automotive Services Group Co. Ltd. received a delisting notice from the Shanghai bourse after its stock consistently closed below the 1-yuan threshold.
- PODCAST
- MOST POPULAR
Sign in with Google
Sign in with Facebook
Sign in with 财新