China’s Auto Auto Association warned against “unfair competition” days after BYD’s price cuts raise market worries about a discount war that can further pressure the profits of electric vehicle automakers.
After a automaker reduced prices on May 23, many others followed the example, “triggering a new panic round around a ‘price war’,” the Chinese Association of Automobile Manufacturers (CAAM) said on Saturday in a statement published on Saturday, without quoting business names.
“Disordered price wars intensify predatory competition, further compressing companies’ profit margins,” said CAAM.
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This “compromises product quality and after-sales guarantees, impairing not only the healthy development of industry, but also consumer rights and safety.”
BYD has reduced prices by up to 34%, which made its shares and other electric vehicle manufacturers plummeted. The rival Li Auto predicted this week a revenue in the second quarter below the estimates, amid the weak demand of consumers.
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The association has asked all automakers to follow the principles of “fair competition”, avoid monopolistic practices that undermine the interests of other companies and not sell at below cost prices.
