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China issues new rules to curb auto price war after January passenger car sales drop 20%
The regulator's ban on below-cost car sales aims to stop a price war that caused an estimated $68 billion industry loss over three years, following a 19.5% drop in January sales.
- On Feb 12, the State Administration for Market Regulation issued final guidelines banning automakers from selling vehicles below total cost after passenger car sales dropped nearly 20%.
- Weak consumer demand, analysts say, reflects reluctance by cash-strapped buyers and cuts to EV tax exemptions plus trade-in subsidy uncertainty, while S&P forecasts light-vehicle sales could drop up to 3% in 2026.
- Regulators broadened total cost of production, tightened software-defined vehicle rules, outlawed deceptive pricing and price-fixing between parts suppliers and auto manufacturers, banned punitive dealer rebate programs, and classed digital car-buying platforms as market monitors issuing dual-risk alerts.
- The industry has absorbed roughly 471 billion yuan in lost output value over three years while major carmakers shortened supplier payment cycles to 54 days, and the regulator warned of `significant legal risks`.
- China’s carmakers are pushing into Europe and Latin America amid fierce home-market competition as passenger-car exports rose in January and BYD, China’s largest carmaker, targets around 1.3 million overseas sales this year.
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China Issues New Rules to Curb Auto Price War After Sales Drop 20%
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Coverage Details
Total News Sources33
Leaning Left7Leaning Right4Center12Last UpdatedBias Distribution52% Center
Bias Distribution
- 52% of the sources are Center
52% Center
L 31%
C 52%
R 17%
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