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BY
Seneca ESG
- July 13, 2023
The China Association of Auto Manufacturers (CAAM) has retracted a pledge made by 16 automakers to avoid “abnormal pricing” due to concerns that it violated China’s antitrust law, as reported by Reuters on July 8. The CAAM stated that the clause about pricing would be deleted from the list of commitments signed by the automakers. The association emphasized its commitment to urging the companies to strictly adhere to antitrust law sand compete fairly with independent pricing.
The pledge was made by executives from major automakers, such as Tesla , BYD , SAIC Motor , NIO , and Xpeng , and aimed to stabilize the market and promote consumption by avoiding disruptive price competition. The move was seen as a truce in a price war that had impacted the industry’s profitability. The price war begin when Tesla implemented price cuts in China, leading other brands to offer significant discounts in response. However, most automakers in China have faced challenges from both the price war and weak post-pandemic demand in 2023. Industry experts AlixPartners anticipate that the intense competition and excess production capacity in China’s automotive market will result in a shakeout, with only 25 to 30 out of the 167 electric vehicle producers registered in China expected to survive by 2030.
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