Cars in China: price war continues despite government appeal

The appeal launched in June by the central government in Beijing to manufacturers to put an end to the price war in China seems to have had no effect: of the top twenty local car manufacturers, seven even increased their discounts on BEVs in July, while in the others, promotions remained unchanged or were barely revised. Thus the fears of an industry characterised by business practices at the limits of affordability remain unchanged, as shown by the China Auto Market data.

Companies, struggling with overcapacity and unbridled competition, do not intend to stop the race to the bottom. "It may be difficult to regulate retail prices. Carmakers will probably refrain from announcing direct price cuts, but there are other promotions available,' wrote Bloomberg Intelligence's auto industry analyst Joanna Chen in a note. She explains that even if Beijing turns the call to end hostilities over prices into law, manufacturers could adopt another strategy: monthly promotions consisting of zero-interest financing, free wallboxes, cabin upgrades such as premium seats, and free data for connectivity. Faced with this scenario, the government is nevertheless trying to run for cover: it has issued a first order concerning car loans: banks must stop partnerships with dealerships, which were getting far too generous commissions.