At a used car market in Beijing, salesman Ma Hui expressed concern that China’s electric vehicle (EV) industry is entering a damaging price war, led by market frontrunner BYD. This competitive landscape has severely affected profit margins for manufacturers and sellers alike, with Ma noting that many in the used car market faced financial losses last year. He indicated that excessive competition among numerous companies producing new energy vehicles is contributing to this crisis.
Global trading partners have previously criticized China for undercutting the international market with cheap EVs, and these concerns are now echoing within the country, prompting calls for caution. The Communist Party’s official newspaper, the People’s Daily, published a commentary highlighting the detrimental effects of what it termed a “price war,” stating that this unsustainable competition could lead to workforce income declines and instability across the automotive ecosystem.
BYD has been particularly targeted for its aggressive price cuts, which recently included discounts of up to 34% on certain models. The situation has prompted industry leaders, like Great Wall Motor’s chairman, to caution that the automotive sector is facing an “Evergrande-like” crisis, reminiscent of the turmoil seen in China’s real estate market. A government-backed group, the China Association of Automobile Manufacturers, also urged manufacturers to avoid selling vehicles at prices below production costs, indirectly criticizing BYD’s strategies.
This intense competition has led to the emergence of “zero mileage used cars,” where vehicles are registered but remain undriven to artificially inflate sales figures. Ma reflected on the broader economic implications, noting that falling prices might discourage consumers from purchasing vehicles in a declining economy, which could further slow recovery in the sector.
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