China industry warns automakers on price war

SHANGHAI/BEIJING — China’s auto industry association urged automakers and authorities to cool “price-cut hype” to ensure the stable development of the industry.

“A price war is not a long-term solution”, the China Association of Automobile Manufacturers wrote in an article published on its WeChat account.

Automakers should work harder on technology and branding while local governments should also use “appropriate methods” while promoting and stabilizing the economy, CAAM added.

More than 40 brands of electric and combustion-engine vehicles in China have offered aggressive discounts to create demand, following Tesla into what has become a price war over market share.

Local authorities have also been rolling out buyer subsidies to drive demand and some of these programs have started to extend to automakers to encourage manufacturing.

The auto industry with its long supply chain has been a pillar to China’s economy, contributing a large proportion of tax revenue and employment.

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