China’s Ministry of Industry and Information Technology (MIIT) and the State Administration for Market Regulation (SAMR) held a regulatory meeting on Thursday with automakers suspected of engaging in “irrational” competitive practices.
The move escalates Beijing’s campaign to rein in the country’s prolonged automotive price war, which has squeezed margins across the supply chain and pushed more than half of the nation’s dealerships into losses.
The authorities reminded companies to “strictly comply with relevant laws and regulations, including the Price Law of the People’s Republic of China and the Provisions on Preventing Predatory Pricing and Dumping Practices,” according to a statement from MIIT’s First Division of Equipment Industry.
Automakers were also instructed to “follow the requirements set out in the Automotive Industry Price Compliance Guidelines, strengthen price-compliance management, enhance product quality control, effectively protect consumers’ legitimate rights and interests, and jointly maintain a market environment characterized by fair competition, quality products, and reasonable pricing.”
Escalating Regulatory Pressure
The meeting marks the latest in a series of regulatory interventions aimed at curbing destructive below-cost pricing across the world’s largest automotive market.
SAMR released the Automotive Industry Price Conduct Compliance Guidelines on February 12, prohibiting automakers from selling complete vehicles or parts below production cost with the intent of stifling market competition.
The rules took effect immediately and define production costs broadly to include manufacturing expenses plus administrative, financial, and sales overheads.
In January, the MIIT, the National Development and Reform Commission, and SAMR had jointly convened a symposium with 17 major automakers — including Tesla, Xiaomi, and XPeng — to build policy consensus against disorderly pricing.
BYD, XPeng, Great Wall Motor, Chery, BAIC, and Leapmotor all publicly pledged compliance following a draft release of the guidelines a month before.
Thursday’s meeting suggests regulators believe some manufacturers have continued to engage in predatory pricing despite those commitments.
CADA Flags Weak Market
The regulatory action coincides with a downbeat assessment from the China Automobile Dealers Association (CADA) released on Wednesday.
With a market analysis of the first week of June, CADA stated that “overall, China’s passenger vehicle market remains under pressure in the short term, with weak retail demand, cautious dealer behavior, and continued price competition.”
The association added, however, that “NEV penetration remains exceptionally high, overseas expansion continues to accelerate, and the used-car market is showing healthy long-term growth potential.”
The dealer sector has been among the hardest hit by the price war.
Data from CADA showed 52.6% of dealers operated at a loss during the first half of 2025, with 74.4% experiencing price inversion — where selling prices fell below acquisition costs.
CADA’s Deputy Secretary-General Lang Xuehong said in March that the number of franchised dealerships nationwide shrank from 32,000 to 31,400 in the first half of 2025, a net loss of roughly 650 stores.
Following the release of the compliance guidelines in early 2026, 25.6% of dealers reported some improvement in price inversion, according to Lang.
Price War Shows Few Signs of Easing
China’s auto price war intensified after BYD and Tesla began offering aggressive financing incentives and direct price cuts in early 2026, prompting nearly all domestic and foreign automakers to follow suit.
The competition has pushed new-energy vehicle penetration past 50% of new car sales but has squeezed margins across the supply chain, from parts suppliers to dealerships.
Beijing has framed its intervention as an effort to shift competition away from pricing and toward quality and innovation.
SAMR spokesperson Wu Peng said in February that manufacturers and dealers had engaged in “non-standard price labeling, price fraud, price collusion and cut-throat competition,” and that the guidelines aimed to correct behavior disrupting market order.
MIIT and SAMR did not disclose which automakers attended Thursday’s meeting.
