China tells automakers to keep price wars out of exports
Aggressive discounting already broke domestic margins badly enough that exports now cushion the profits of BYD and others. By Stewart Burnett
China’s Commerce Ministry, together with the Ministry of Industry and Information Technology (MIIT) and the state market regulator, issued new guidelines on 1 September instructing Chinese automakers to avoid “disorderly competition” —in other words, price wars—as they expand into overseas markets. The 20-point document explicitly aims to prevent the destructive activities that have squeezed margins domestically from spreading into the export markets now driving much of the industry’s growth.
The rules call on automakers to base pricing on costs and market conditions rather than using price to gain an unfair competitive advantage. It also asks automakers to avoid frequent or steep price changes that could harm consumers or brand image, and to respect local dealers’ right to set their own prices. Companies are also told to provide truthful marketing disclosures, strengthen antitrust and anti-corruption compliance, and enhance safety management and emergency response planning at overseas production sites.
The guidelines do not specify penalties for non-compliance, and the Ministry of Commerce, MIIT and market regulator did not detail how enforcement will work. In a statement seen by local Hong Kong news media, a Commerce Ministry official said the aim is to promote “rational and orderly” cross-border deployment of industrial and supply chains. Independent analyst Gao Shen told South China Morning Post that the “initial signs that Chinese carmakers would launch harsh discount wars abroad have prompted regulators to step in”.
The scale of what regulators are trying to manage is considerable. China exported 8.32 million vehicles in 2025 to more than 200 countries and regions, and Chinese companies have invested in auto manufacturing projects in more than 80 markets. Some scrutiny has already been applied: Thailand, for example, investigated BYD’s dealers over discounting in 2024 after a series of consumer complaints. The probe eventually cleared the company, but only after Chief Executive Wang Chuanfu pledged BYD would be more sensitive about future pricing changes.
The guidance is hardly a surprise, given the sheer strain China’s domestic car market has been put under by the price warring activities of its local players. Regulators appear determined not to export this behaviour, which may repel consumers, alongside the vehicles themselves. The impact on local players has been substantial, and only a handful of China’s roughly 30 pure play electric vehicle (EV) brands are currently profitable. AlixPartners projects that just seven will break even by 2030.
Overall Chinese EV deliveries fell 13% year-on-year in the first half of 2026, partly because persistent price cuts have encouraged a wait-and-see mentality among buyers anticipating even deeper discounts later. Even BYD is feeling substantial pain from its domestic market: a 67.8% year-over-year rise in export sales during H1, to 792,000 vehicles, was not enough to offset a 15.7% overall drop. Revenue also fell 7.1% to CN¥344.8bn (US$51.2bn).
The development is the latest in a wave of regulatory updates. Automotive World has been tracking the multiple changes affecting Chinese automakers in recent months, including a proposal that would add a dedicated chapter on autonomous vehicles to its Road Traffic Safety Law. Under the plan, automakers would handle traffic violations committed while a vehicle drives itself, while vehicles using advanced driver assistance systems (ADAS) would remain under the driver’s full responsibility.
China appears to be applying a lesson learned at home directly to its export strategy: aggressive discounting has already eroded domestic automaker margins badly enough that exports have become an essential source of profitability for companies like BYD. Regulators clearly do not want that same destructive dynamic to take hold in the overseas markets now cushioning the industry.