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Price wars foisted by auto manufacturers are hurting Chinese car dealerships

The behaviour of China’s carmakers has been described as ‘dragging the entire industry into a downward spiral’
  • The central government has stepped in with a pledge to tackle unfair competition that has put many dealerships at risk of closure

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UPDATED: 04 Jun 2025, 8:23 am

China’s car dealerships have called on the country’s automakers to stop foisting price wars on them, as intense competition over who can charge the least is threatening their survival, China Daily and Reuters report. 

In a statement issued on Tuesday, the China Auto Dealers Chamber of Commerce said that dealers were struggling with weakening margins, rising inventory levels, tighter liquidity and overall operational stress. 

“The situation worsened notably since the second quarter as a fresh wave of discounts, led by major EV [electric vehicle] players, spread through the market,” the chamber said. “Price wars may win headlines, but they are dragging the entire industry into a downward spiral.”

[See more: Tesla’s fall from favour presents an opportunity for Chinese EV makers]

The statement came on the heels of a pledge from the central government to tackle unfair competition. The China Association of Auto Manufacturers has also urged its members not “dump goods at prices below cost,” Reuters says.

The pressure has already caused some dealerships to shut, including a multi-store dealer for BYD’s EVs in Shandong Province.

Dealers have issued a number of recommendations for industry reform, urging automakers to stop confusing consumers with frequent price changes and to set reasonable annual production and sales targets that are aligned with actual demand. They also warned manufacturers to stop offloading excess inventory onto dealers.

The chamber said that manufacturers should not be “coerced to withdraw from the network and close their stores in the name of optimising network channels,” and noted that those exiting the industry needed to be fairly compensated. 

UPDATED: 04 Jun 2025, 8:23 am