Post: “Price war” stimulants must not be used

In response to the recent new round of “price war” launched by automakers, the China Association of Automobile Manufacturers issued the “Initiative on Maintaining Fair Competition Order and Promoting the Healthy Development of the Industry”, clearly expressing opposition. The Ministry of Industry and Information Technology also expressed its support for the initiative, emphasizing that “there are no winners in the ‘price war’, let alone a future”. Clear signals and a firm attitude put the brakes on the disorderly “price war”, which can be said to be timely.
In the past two years, some automakers have repeatedly opposed “involutionary” competition, but have continuously pulled the trigger of “price war”, seriously affecting the industry ecology and market order, and impacting the security of the industrial chain and supply chain. Data show that the profit margin of the automobile industry in 2024 will be only 4.3%, lower than the profit margin of the entire downstream industry and the level in 2023; in the first quarter of this year, the profit margin further dropped to 3.9%. On the one hand, there are record-breaking production and sales and good reputation, and on the other hand, there is the dilemma of “more production and more losses” and “increased revenue but no increased profits”. Such a deviation means that the industry is in a sub-healthy state and cannot last.
The “price war” is full of smoke, and there are many deep-seated hidden dangers. The ultimate victims are the legitimate rights and interests of consumers, such as the profit margins and accounts receivable of suppliers, the remuneration of production workers, the quality and safety of products, and after-sales services. Low-priced and low-quality products will also greatly consume the international image and reputation that “Made in China” has accumulated with great difficulty. The lesson is not far away. In the late 1990s, domestic motorcycles were popular in the Southeast Asian market due to their good quality and low price. But the good times did not last long. The price war eventually led to a decline in product strength, not only losing market share, but also causing the reputation of Made in China to plummet. Today, we must not let the “Waterloo” of domestic motorcycles happen in the new energy vehicle industry.