Chinese Car Price War Yet to Subside, BYD to Geely Remain Aggressive

JAKARTA, KOMPAS.com - The Chinese automotive industry has yet to emerge from the vortex of the price war that has been ongoing for the past two years. Far from subsiding, several manufacturers remain aggressive in offering discounts to maintain sales. Amid weakening demand, BYD has once again significantly reduced prices on its products. Similar steps have been taken by domestic rivals such as Geely and Chery, which continue to rely on competitive pricing strategies. Regulators view these practices as potentially creating unhealthy competition or ‘involutive competition’, a term once used by Premier Li Qiang. However, to date, such policies have not shown significant impact. Data from Bloomberg, cited by Carscoops, records an average price drop of around 10 per cent for BYD’s product lines in March. Meanwhile, Geely and Chery offer deeper discounts of about 15 per cent, which have remained relatively stable over the past 12 months. One of the main factors driving the price war is the imbalance between production and demand. Throughout last year, new car sales in China were recorded at around 23 million units, far below the annual production capacity of 55.5 million units. This situation forces manufacturers to increase exports, particularly electric vehicles. In fact, shipments of EVs from China to global markets have reportedly surged significantly in recent times. On the other hand, regulatory pressure is also beginning to affect companies’ finances. Manufacturers are now required to accelerate payments to suppliers, differing from previous practices that often delayed settlements to preserve cash flow. Secretary General of the International Organization of Motor Vehicle Manufacturers, Francois Roudier, assesses that this situation is not entirely beneficial. According to him, although it appears attractive to consumers, the price war actually squeezes manufacturers’ margins and risks disrupting industry stability. “It looks beneficial for consumers, but manufacturers are actually losing money. The impact could spread to the entire industrial ecosystem,” he said.