China moved to tighten control over car pricing as new draft rules were released for public review. The move came as rising concern grew over harsh price competition in the world’s largest auto market. The draft rules aim to guide automakers toward fairer pricing during a period of weak demand and rising production capacity.
New Draft Amendment Targets Car Market Competition
The draft amendment seeks to stop carmakers from selling vehicles below cost to push rivals out. The National Development and Reform Commission and the State Administration for Market Regulation released the text for comment. They said the current pricing law no longer fits the country’s fast-changing market. They also noted that new business models have created fresh pricing problems.
The agencies stated that irregular pricing has grown across many sectors. They said firms have used sharp price cuts to control demand. They added that some companies have forced others to match these prices. They said these practices have created unfair market pressure and harmed buyers and producers.
The draft rules say cost-based sales must follow clear legal limits. They also say companies cannot use data or algorithms to fix or distort prices. The agencies said, “New forms of trade need improved rules to keep the market stable.”
The draft amendment extends beyond cars and covers many industries. Yet the auto sector now sits at the center of the debate because of a long stretch of low prices. Officials said some carmakers have used intense cuts to hold market share during slow sales.
Growing Focus on Car Price Wars and Excess Capacity
China’s electric car market has seen strong growth, but it also faces heavy pressure. Many automakers expanded quickly in recent years. Now many factories produce more than buyers demand. Some firms have dropped prices many times to move stock and reach sales targets.
Industry analysts say more than 500 new energy vehicle brands once operated in China. The number is now near 129. Consultants expect only a small group to survive over the next decade. This has pushed many firms to cut prices again and again.
The new draft rules warn carmakers about “irrational competition” that can hurt long-term growth. They also warn that carmakers who ignore cost rules face “legal risks,” including larger fines. The agencies said pricing must follow fair and open standards.
The rules focus on car production, parts supply, sales plans, and retail pricing. They also cover price displays, which regulators say have become confusing in some showrooms. Officials said some dealers use unclear labels that hide the true cost.
The rules also seek to limit collusion between carmakers and parts suppliers. Officials said such behavior can lead to price control across markets. They said open prices can build trust and support steady progress.
Industry Reaction and Next Steps
Major automakers such as BYD and Xpeng said they support the draft rules. They said they will strengthen pricing controls and avoid wrongful sales tactics. They also said they support fair competition because it can raise product quality.
Trade groups say the draft rules show the government wants a healthier car market. They say the rules could support stable pricing as firms adjust to slower demand. They also say it may help firms compete in overseas markets where low prices cause disputes.
The draft amendment will stay open for public comment until Aug 23. The car-specific draft rules will remain open until Dec 22. Regulators said they will review all comments before final approval.
Observers expect more changes as the government studies the market. They say China wants to stop harsh price fights that weaken the auto industry. They also say the government aims to guide firms away from extreme cuts that strain smaller companies.
China faces weak factory prices and slow growth in several sectors. Officials say clear pricing rules can support market order. They also say the rules will protect buyers as new car technology spreads.
