China’s State Administration for Market Regulation released draft guidelines on Friday establishing a framework for automotive pricing practices.
The “Guidelines for Price Behavior Compliance in the Automotive Industry,” released for public comment with a December 22 deadline, represent Beijing’s most detailed intervention yet into the pricing war that has engulfed the country’s auto sector.
Manufacturers and dealers were warned of “significant legal risks” for selling vehicles below production cost in an effort to eliminate competitors or monopolize the market.
However, that will still be allowed when legally disposing of overstocked inventory.
Below-Cost Sales Prohibited
The document enumerates nine specific methods that would trigger enforcement action, including using discounts and subsidies that push effective factory prices below cost, providing extra quantities to reduce effective pricing, and submitting below-cost bids in tenders.
The guidelines define production cost as manufacturing cost plus period expenses comprising management, financial, and sales expenses.
Factory price is defined as the invoice price from manufacturers to dealers and traders.
Article 18 applies parallel restrictions to sales enterprises, prohibiting them from selling below their procurement cost.
Article 9 warns that price collusion among automakers or parts suppliers also carries significant legal risks.
Prohibited conduct includes fixing or changing vehicle and parts price levels, fixing price fluctuation ranges, and agreeing to adopt unified price calculation standards.
‘Paid Unlocking’
Article 13 establishes new transparency requirements for vehicle features requiring paid activation—a practice increasingly common as automakers adopt software-defined vehicle architectures.
For features with free trial periods, manufacturers must disclose the trial duration and subsequent fee structure at the time of sale.
The free period begins from vehicle delivery, and consumers must be reminded before the trial expires.
For paid differentiated value-added features, manufacturers must provide clear disclosure at sale; features not disclosed at purchase cannot subsequently be charged for.
Separately, Article 12 prohibits manufacturers from engaging in price discrimination against dealers and traders operating under equivalent transaction conditions.
Article 6 mandates that manufacturers establish pricing strategies based on production costs and market supply and demand, implementing full-chain price behavior management across vehicle sales, financial services, and related processes.
As reported on Thursday, China and the European Union have resumed negotiations over a minimum price plan for Chinese-made electric vehicles.
The European Commission concluded its anti-subsidy investigation in October 2024, imposing definitive extra duties on Chinese-made fully electric vehicles through late 2029.
