China has drawn up new guidelines aimed at overseeing automakers’ pricing strategies in response to escalating market competition.
China’s State Administration for Market Regulation (SAMR) issued a “Guidelines for Price Behavior Compliance in the Automotive Industry” on Friday for public consultation, with feedback accepted until December 22.
The guidelines set out standards for pricing conduct among automakers, detailing compliance requirements across the industry—from vehicle and parts manufacturing to pricing policies and sales practices.
It will also prevent companies from pricing models too cheaply, as part of efforts to curb harsh competition that is contributing to deflation risks.
Automakers are mandated to adopt comprehensive pricing systems that encompass vehicle sales, financial services, and related operations. They must also regulate promotional activities and pricing policies, ensuring rebate schemes are clearly outlined in contracts while upholding dealers’ independent pricing rights.
Manufacturers and dealers could incur ‘significant legal risks’ if they price vehicles below production costs to eliminate competitors or dominate the market.
China’s manufacturing overcapacity and declining prices have led to what officials describe as involution—intense competition with shrinking returns. This situation has escalated trade tensions, as Chinese producers increasingly push low-cost goods abroad.
In response, several international markets have imposed steep tariffs—some reaching 100% on Chinese-made cars—with Mexico most recently announcing 50% duties in December.
The guidelines focus on ensuring fair pricing by forbidding discrimination against operators under similar transaction terms and prohibiting collusion between automakers and parts suppliers.
For vehicle functions that require paid activation, manufacturers must clearly disclose trial periods and fee arrangements to keep consumers informed.
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