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Japan Today
15 hours ago
- Automotive
- Japan Today
Chinese automakers get stern 'price war' warning after discount spree
BYD was not singled out by name, but a leading China automakers group warned of a "price war" after the company cut prices on nearly two dozen models A top industry group had a stern rebuke Saturday for automakers fueling a "price war", a week after Chinese EV giant BYD announced sweeping trade-in discounts, with multiple competitors following suit. "Since May 23, a certain automaker has taken the lead in launching a substantial price drop campaign... triggering a new round of 'price war' panic," the China Association of Automobile Manufacturers (CAAM) said in a statement posted to its WeChat account. The group warned that such "disorderly" competition would "exacerbate harmful rivalry" and hurt profit. The statement, dated May 30, did not single out any company by name, but on May 23, BYD announced it was offering big trade-in discounts on nearly two dozen makes, offering discounts of up to 34 percent. Its cheapest model, the smart-driving Seagull, now goes for a starting price of 55,800 yuan ($7,800), down from 69,800 yuan, with a trade-in. Days later, Stellantis-backed Chinese EV startup Leapmotor announced similar discounts on two "entry-level" models through June 8. Geely Auto announced Friday limited-time trade-in subsidies for 10 models, with its X3 Pro going for the lowest starting price of 44,900 yuan. But there is growing domestic criticism against what the autos association called "involution" -- a popular tag used to describe the race to outcompete that ends up nowhere. The CEO of China's Great Wall Motor, whose annual revenue was roughly a quarter of BYD's, compared it to the start of China's years-long housing slump triggered by the 2021 default of property giant Evergrande. "Evergrande in the auto industry already exists," Wei Jianjun said this month in an interview with Chinese outlet Sina Finance. "I hope that... all these years of hard work will not go to waste." Beijing has poured vast state funds into the electric vehicle sector, supporting the development and production of less polluting battery-powered vehicles. But China's automakers association on Saturday warned its goliaths to play fair. "Leading companies must not monopolise the market," the CAAM statement said. It added that "with the exception of lawful discounting, companies must not sell products below cost nor engage in misleading advertising". Such behavior disrupted the market and harmed both consumer and the industry, it said. An unnamed official from China's Ministry of Industry and Information Technology added that price wars "produce no winners and no future", the state-backed Global Times reported Saturday. © 2025 AFP
RTHK
a day ago
- Automotive
- RTHK
Beijing clamps down in bid to stop auto price wars
Beijing clamps down in bid to stop auto price wars BYD's incentives for buyers include taking the cost of one of its Seagull electric hatchbacks to as little as 55,800 yuan. Photo: CFOTO/AFP China urged its automotive industry to halt brutal price wars, calling them a threat to the sector's health and sustainable development, after key executives jousted over pricing pressure following large discounts offered to buyers. Tension between some top players in the world's largest auto market has spilled into the open as competition intensifies, with price wars begun in early 2023 showing little sign of abating, despite concern among both government and industry. The Ministry of Industry and Information Technology vowed to step up efforts to correct what it called excessive competition, the official news agency Xinhua said on Saturday. "There are no winners in a 'price war', let alone a future," the agency cited an unidentified ministry official as saying. The comments came after fresh incentives offered last week on more than 20 models by electric vehicle giant BYD, that prompted several rivals, such as Geely and Chery, to follow suit. The ministry's comments echo a similar call, also made on Saturday, by the China Association of Auto Manufacturers for a truce in the price wars, saying they affect profitability and efficiency. It added that a new round of price war "panic" was touched off in China after substantial discounts offered on May 23 by an automaker it did not identify. It proposed remedies such as auto companies sticking to the principle of fair competition and larger players refraining from market monopolies. "Apart from reducing the price of goods according to law, enterprises shall not dump goods at prices below cost," it added. BYD's incentives, which include government trade-in subsidies, can cut the domestic cost of its BYD Seagull electric hatchback to as little as 55,800 yuan. On Friday, a BYD executive had decried as alarmist comments by the chief of Great Wall Motor that the industry was "unhealthy". Great Wall's Wei Jianjun had said pricing pressure was hammering the bottom lines of car companies and suppliers. (Reuters)
France 24
a day ago
- Automotive
- France 24
Chinese automakers get stern 'price war' warning after discount spree
"Since May 23, a certain automaker has taken the lead in launching a substantial price drop campaign... triggering a new round of 'price war' panic," the China Association of Automobile Manufacturers (CAAM) said in a statement posted to its WeChat account. The group warned that such "disorderly" competition would "exacerbate harmful rivalry" and hurt profit. The statement, dated May 30, did not single out any company by name, but on May 23, BYD announced it was offering big trade-in discounts on nearly two dozen makes, offering discounts of up to 34 percent. Its cheapest model, the smart-driving Seagull, now goes for a starting price of 55,800 yuan ($7,800), down from 69,800 yuan, with a trade-in. Days later, Stellantis-backed Chinese EV startup Leapmotor announced similar discounts on two "entry-level" models through June 8. Geely Auto announced Friday limited-time trade-in subsidies for 10 models, with its X3 Pro going for the lowest starting price of 44,900 yuan. But there is growing domestic criticism against what the autos association called "involution" -- a popular tag used to describe the race to outcompete that ends up nowhere. The CEO of China's Great Wall Motor, whose annual revenue was roughly a quarter of BYD's, compared it to the start of China's years-long housing slump triggered by the 2021 default of property giant Evergrande. "Evergrande in the auto industry already exists," Wei Jianjun said this month in an interview with Chinese outlet Sina Finance. "I hope that... all these years of hard work will not go to waste." Beijing has poured vast state funds into the electric vehicle sector, supporting the development and production of less polluting battery-powered vehicles. But China's automakers association on Saturday warned its goliaths to play fair. "Leading companies must not monopolise the market," the CAAM statement said. It added that "with the exception of lawful discounting, companies must not sell products below cost nor engage in misleading advertising". Such behaviour disrupted the market and harmed both consumer and the industry, it said. An unnamed official from China's Ministry of Industry and Information Technology added that price wars "produce no winners and no future", the state-backed Global Times reported Saturday.
Gulf Insider
2 days ago
- Automotive
- Gulf Insider
BYD Price Slashing To Prompt Chinese EV Consolidation
BYD's aggressive discount campaign is shaking up China's EV market, pushing rivals to slash prices and raising concerns of an industry-wide 'race to the bottom,' according to Nikkei Asia. Since January, BYD has launched repeated limited-time offers. Its latest, running through June, cuts prices by up to 34% across 22 EV and hybrid models, with its Seagull now starting at just $7,700. Morningstar's Vincent Sun said investors are worried this signals a prolonged price war. 'I believe sales targets are the main driver behind this,' he said. BYD aims to sell 5.5 million vehicles in 2025, including 800,000 overseas. But its stock fell over 8% Monday and continued sliding Tuesday after the discount news. Great Wall Motor chairman Wei Jianjun hinted at growing debt in the industry, saying, 'The Evergrande of the automotive industry already exists; it just hasn't collapsed yet.' Many believe he was referring to BYD, whose debt ratio stood at 70.7% in March. BYD's Li Yunfei appeared to hit back with a cryptic social media post: 'A dog can bite a person! But a person cannot bite a dog!' Nikkei writes that other carmakers quickly followed BYD's lead. Geely's Galaxy brand launched deals with discounts up to 20,000 yuan, while Changan and Leapmotor also cut prices. Rising inventories are partly to blame—China had 3.5 million unsold vehicles in April, a 57-day supply, the highest since late 2023. BYD alone reported 154.4 billion yuan in inventory, up 33% from the previous quarter. Despite its lead, BYD is feeling pressure. Haitong's Oscar Wang said competitors are catching up in tech and pricing. 'While long-term reliance on price wars may erode brand premium value, it can help capture market share in the short term,' he said. Macquarie's Eugene Hsiao noted, 'We think BYD is looking to both sustain its position in the local EV market while also forcing competitors to match them on prices, which may accelerate future consolidation.' The Chinese government has signaled support for mergers among state-owned auto firms, and Geely recently announced it will take Zeekr private to cut overlapping costs. S&P Global warned that 'many entities [are] on an unsustainable path' and predicted 'a sweeping consolidation' ahead. 'For many firms, a merger or some form of partnership will be necessary for survival.' Also read: China Grants Visa-Free Entry To Bahraini Citizens Starting June 9
CNBC
3 days ago
- Automotive
- CNBC
China's EV price war heats up — What's behind the big discounts?
BEIJING — Competition in China's electric car market just got fiercer with consequences for the domestic economy and even the global auto market. Industry giant BYD last week announced a slew of discounts — some of nearly 30% or more — across several of its lower-end battery-only and hybrid models. The budget-friendly Seagull compact car saw its price drop to 55,800 yuan ($7,750). Other major Chinese automakers have begun following suit. "BYD's action this time has made the industry rather nervous," Zhong Shi, an analyst with the China Automobile Dealers Association, said in Mandarin, translated by CNBC. "The industry is in [a state of] relatively large shock," he said, noting smaller automakers are now more worried about their ability to compete. The industry has been a rare bright spot in an economy that has been seeing slower growth and lackluster consumer demand. Part of Beijing's latest attempt to spur consumption included subsidies for new energy vehicles, a category that includes battery-only and hybrid-powered cars. "The latest car price competition underscores how supply-demand imbalance continues to fuel deflation," Morgan Stanley's Chief China Economist Robin Xing said in a report Wednesday. "There is growing rhetoric about the need for rebalancing [to more consumption], but recent developments suggest the old supply-driven model remains intact," he said. "Thus, reflation is likely to remain elusive." China's electric car market has already been in a price war for the last two years, partly fueled by Tesla. But this time, traditional automakers, including state-owned ones, are feeling significant heat as the share of new energy vehicles has come to account for about half of new passenger cars sold in China. Last week, Great Wall Motors Chairman Wei Jianjun warned of an "Evergrande" in China's auto industry that had yet to explode, comparing the fast-growing EV industry to the country's bloated real estate sector. The outspoken private sector autos executive was speaking to Chinese media outlet Sina in an interview posted on May 23. Once China's real estate giant, Evergrande defaulted on its debt in late 2021 as the property market slumped after Beijing cracked down on the company's high debt levels. Demand for homes also fell following tighter government regulations, leaving the developer struggling to finance the remaining construction of pre-sold units. As Chinese media scrutiny on automakers' financial situation rose, BYD on Wednesday refuted reports that it excessively pressured one of its dealers on cash flow. The dealer, Jinan Qiansheng in the eastern province of Shandong, did not immediately respond to a CNBC request for comment. BYD referred CNBC to its statement to Chinese media. In the early years of China's state-supported efforts to become a global leader in the emerging electric vehicle industry, the Ministry of Finance said it found at least five companies cheated the government of over 1 billion yuan ($140 million). The high-level policy encouraged a flood of startups, of which only a handful survived. In China, the average car retail price has fallen by around 19% over the past two years to around 165,000 yuan ($22,900), according to a Nomura report this week, citing industry data from Autohome Research Institute. Price cuts were far steeper for hybrid or range-extension vehicles, at 27% over the last two years, while battery-only cars saw prices slashed by 21%, the report said. It noted that traditional fuel-powered cars saw a below-average 18% price cut. In contrast, the average price of a new car in the U.S. was $48,699 in April, up nearly 1% from two years earlier, according to CNBC calculations of data from Cox Automotive. The average electric car price last month was an even higher $59,255. BYD's latest round of price cuts didn't include the company's higher-end models priced around 200,000 yuan, such as its flagship Han electric sedan. Reuters pointed out the newest model of the Han released in February was about 10% cheaper than its previous version, according to its calculations. The Chinese auto giant, which was backed by Warren Buffett in its early years, has rapidly captured market share in China with its wide range of cars at various price points. The company reported a net profit increase of 49% to 14.17 billion yuan last year. Total current liabilities rose by more than 60% to 57.15 billion yuan. Cash and cash equivalents fell slightly to 102.26 billion yuan. Rather than reflecting market expansion, double-digit growth of new energy vehicles sales in China is just eating into the business of internal combustion engine cars, Ying Wang, Fitch managing director, APAC Corporate ratings, told reporters Tuesday. She noted how the country's auto market hasn't grown much since 2018, and expects autos retail sales to only increase by low single digits this year. Automakers will keep on using price cuts to gain market share in China this year, she said. Wang pointed out another option is for companies to include more features, such as advanced driver-assist systems, for free instead of asking consumers to pay more for them as an add-on. Geely-backed Zeekr in March said it was releasing its advanced driver-assist system for free, while Tesla has attempted to charge its customers for a similar feature. A month earlier, BYD announced it was rolling out driver-assist capabilities to more than 20 of its car models. In the last several months, China's top leaders have increasingly called for efforts to address non-productive business competition, known as "involution." The term was mentioned in the premier's annual work report in March and in the market regulator's meeting last week which called for "comprehensively rectifying 'involutionary' competition." However, the massive effort to produce lower-cost electric cars in China, and the automakers' subsequent move to expand into other markets, has increased worries about the impact on other countries' auto industries. The European Union slapped tariffs on imports of China-made electric cars after probing the companies over the use of government subsidies in their manufacture. The U.S. also imposed duties of 100% on China-made electric cars, quashing hopes that the vehicles might enter the world's second-largest auto market. But in the EU, tariffs have had limited effect. In April, BYD outsold Tesla in Europe for the first time, according to JATO Dynamics. Tesla's Europe sales plunged by 49% that month, according to the European Automobile Manufacturers' Association.
