Chinese government warns automakers for ‘irrational competition’ and overpriced cars

BEIJING (Reuters) – China’s regulators on Thursday summoned and warned automakers suspected of engaging in what they called irrational competition — Beijing’s latest effort to contain the country’s long-running auto price war.

The Ministry of Industry and Information Technology (MIIT) and the State Administration for Market Regulation (SAMR) have required companies to strictly comply with legislation, including the Pricing Act and rules against selling below cost. Regulators also demanded more quality control of vehicles and effective protection of consumer rights. The manufacturers summoned were not identified.

According to the MIIT, the joint action seeks to preserve a market order marked by quality products, fair prices and healthy competition.

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The move comes amid a deep adjustment in the Chinese auto market. The China Passenger Vehicle Association (CPCA) warned this week that the price war is still ongoing. Consumers’ expectations for new discounts and launches have been weakening demand, according to a report from the entity released the day before, while dealerships, cautious, reduce purchases to avoid accumulation of inventory.

In May, retail sales of passenger cars fell 22.1% year-on-year to 1.51 million units. New energy vehicles (NEVs) fell 7.5% to 950 thousand units — the fifth consecutive month of decline compared to the previous year.

Even so, the share of electrified vehicles hit a record: with sales of gasoline cars shrinking faster in the face of expensive fuels, the so-called new energy vehicles (NEVs) reached 62.9% of retail in May and 66.7% in the first week of June. Abroad, the advance is even more significant: China exported 424 thousand NEVs in the month, up 112.6% over May 2025 and 54% of all passenger car exports — the highest share ever recorded.