China Targets Involution-Style Competition in Auto Sector Amidst NEV Boom
The Ministry of Industry and Information Technology pledges to enhance regulatory measures in response to disorderly price wars disrupting the automotive market.
BEIJING — The Ministry of Industry and Information Technology (MIIT) of China announced on Saturday its commitment to address "involution-style" competition in the auto sector, emphasizing the need for a fair and orderly market environment.
This announcement follows an initiative by the China Association of Automobile Manufacturers (CAAM) urging automakers to uphold principles of fair competition and foster healthy industry growth.
The MIIT's response comes amid rising concerns regarding recent disorderly price wars that have significantly impacted normal business operations within the industry.
An official statement highlighted that these unscrupulous price reductions threaten the sustainable development of the sector, harming research and development investments and potentially leading to safety issues that infringe on consumer rights.
Citing the detrimental effects of such competition, the MIIT official remarked, "There are no winners in a price war, nor is there any future," emphasizing that the long-term implications would weaken industry development.
To counteract the involution-style competition, the MIIT plans to implement measures aimed at upgrading industrial structures, enhancing product quality through inspections, cooperating with relevant authorities to combat unfair practices, and undertaking necessary regulatory actions.
Furthermore, the MIIT has called upon companies to boost innovation and fulfill their social responsibilities, reinforcing the need for higher quality and cost-effective products for consumers.
In parallel, the CAAM reiterated its stance on maintaining fair competition in the rapidly expanding new energy vehicle (NEV) market, which has seen over 40 percent of new car sales attributed to NEVs. However, recent market dynamics have led to declining profitability largely attributed to involution-style competition, exacerbated by significant price cuts initiated by major carmakers on May 23.
The CAAM highlighted that such sharp reductions have caused considerable market panic, stressing the need for adherence to fair competition principles.
It warned companies against selling below cost, deceptive marketing practices, and actions that disrupt market order detrimental to the industry and consumer interests.
Self-regulatory compliance aligned with national laws and regulations was also encouraged to stabilize the current market environment.
This announcement follows an initiative by the China Association of Automobile Manufacturers (CAAM) urging automakers to uphold principles of fair competition and foster healthy industry growth.
The MIIT's response comes amid rising concerns regarding recent disorderly price wars that have significantly impacted normal business operations within the industry.
An official statement highlighted that these unscrupulous price reductions threaten the sustainable development of the sector, harming research and development investments and potentially leading to safety issues that infringe on consumer rights.
Citing the detrimental effects of such competition, the MIIT official remarked, "There are no winners in a price war, nor is there any future," emphasizing that the long-term implications would weaken industry development.
To counteract the involution-style competition, the MIIT plans to implement measures aimed at upgrading industrial structures, enhancing product quality through inspections, cooperating with relevant authorities to combat unfair practices, and undertaking necessary regulatory actions.
Furthermore, the MIIT has called upon companies to boost innovation and fulfill their social responsibilities, reinforcing the need for higher quality and cost-effective products for consumers.
In parallel, the CAAM reiterated its stance on maintaining fair competition in the rapidly expanding new energy vehicle (NEV) market, which has seen over 40 percent of new car sales attributed to NEVs. However, recent market dynamics have led to declining profitability largely attributed to involution-style competition, exacerbated by significant price cuts initiated by major carmakers on May 23.
The CAAM highlighted that such sharp reductions have caused considerable market panic, stressing the need for adherence to fair competition principles.
It warned companies against selling below cost, deceptive marketing practices, and actions that disrupt market order detrimental to the industry and consumer interests.
Self-regulatory compliance aligned with national laws and regulations was also encouraged to stabilize the current market environment.
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