The price war in the Chinese auto industry could potentially ease as 16 automakers and the China Association of Automobile Manufacturers (CAAM) signed a pledge at the 2023 China Auto Forum in Jiandang, Shanghai, vowing to uphold a fair market structure.
Tesla’s repeated price cuts on its electric vehicle models this year sparked a global EV price war. The repercussions were felt in the Chinese automotive market, leading to discontent among customers who had recently purchased Teslas at higher prices, while around 30 other automakers were compelled to lower their prices to stay competitive.
Concerns arose that smaller players in the industry, unable to sustain price reductions, could face the possibility of closure, requiring them to seek partnerships or engage in consolidation efforts.
In an effort to alleviate the tensions resulting from the price war, major automakers in China have collectively pledged to protect the market structure. The list of signatories includes Dongfeng Motor, China FAW, SAIC, BAIC, Changan Automobile, GAC, Chery, JAC, Geely, China National Heavy Duty Truck, Great Wall Motor, BYD, Nio, Li Auto, Xpeng, and Tesla, as reported by Cnevpost.
Tesla and BYD, the prominent players in the new energy vehicle (NEV) sector, appear to have benefited significantly from the price war, potentially impacting smaller competitors. Both brands achieved record-breaking sales in the second quarter of 2023.
In China, Tesla reportedly maintains a market share of 7 percent, whereas it commands a 60 percent share in the US battery electric vehicle (BEV) market. The signed commitment does not provide an assurance of price stability, and automakers may still adjust prices based on various economic factors.
Nonetheless, it could serve as an initial indication of automakers progressing in good faith.
Automakers in China, prompted by the price war triggered by Tesla’s repeated price cuts, have pledged to restore stability in the industry. Sixteen automakers, including major players like Dongfeng Motor, China FAW, SAIC, BAIC, Changan Automobile, GAC, Chery, and Geely, along with the China Association of Automobile Manufacturers (CAAM), signed a commitment at the 2023 China Auto Forum in Shanghai.
The pledge aims to maintain a fair market structure and mitigate the negative impact of the price war on the Chinese automotive market. This move is seen as an effort to address concerns such as customer dissatisfaction and the potential adverse effects on smaller automakers who may struggle to sustain price cuts.
While the commitment does not guarantee price stabilization, it signifies a collective intention among automakers to work towards maintaining a healthier market environment.
Source : insideevs.com
