China Association of Automobile Manufacturers (CAAM) recently organized automakers to publicly pledge to compete fairly, especially not setting abnormal pricing. Two days later, CAAM said it realized the price-related statement was inconsistent with China's anti-monopoly law and has removed it from the pledge.
The price war in China started at the beginning of 2023 when multiple carmakers followed Tesla and cut vehicle prices significantly. In late March, CAAM urged the automotive industry to cool down the price cut as soon as possible to return to normal.
On July 6, CAAM, directed by China's Ministry of Industry and Information Technology, gathered 16 major carmakers in China to sign a non-binding pledge. The highlight of the pledge is car companies will maintain fair competition and not disrupt it with abnormal pricing, according to Bloomberg.
The statement drew widespread discussion in China. The Paper reported that CAAM issued an announcement on July 8, saying the price-related statement did not express the intention appropriately and was inconsistent with the anti-monopoly law.
CAAM said it has removed the statement from the pledge, asking automakers to comply with China's anti-monopoly law and other regulations to set their pricing and maintain fair competition.
According to Reuters, Liu Xu, a researcher at the National Strategy Institute of Tsinghua University, said the language use of the pricing pledge was too vague to be determined if it will cause a monopoly.
Cui Dongshu, secretary general of the China Passenger Car Association, told Reuters that subsidy programs from local governments in China should be removed because they distort the pricing system. He added that steady price reductions from car companies should be allowed.
According to Bloomberg, other details of the pledge include not exaggerating or using false publicity to attract attention and prioritizing quality products.
Executives from 16 automakers signed the agreement at the China Auto Forum in Shanghai. The companies include BYD, Nio and Geely. Tesla was the only non-Chinese brand that joined the pledge.
