China’s Car Dealers in Yangtze Delta Appeal to Automakers Amid Price Wars

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Jul 3, 2025 - 10:08 Updated: Jul 2, 2025 - 23:02
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China’s Car Dealers in Yangtze Delta Appeal to Automakers Amid Price Wars
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Car dealers in one of China’s major manufacturing hubs have appealed to automakers regarding “severe challenges” facing the industry, as the ripple effects of the country’s cut-throat price war wages on.

A joint statement dated June 30 was posted on Chinese social media platform WeChat by a coalition of car dealerships in provinces and cities in the Yangtze River Delta region surrounding Shanghai.

The open letter addressed to all automakers notes that “high inventory, disorderly market competition, and increased risk of capital chain rupture” are the main factors contributing to the significant discrepancy between domestic supply and demand.

The delta region accounted for 23 percent of China’s domestic auto sales in 2024, highlighting the significance of this recent announcement.

“Inventory pressure exceeds the warning line,” the car dealers warned, adding that vehicle inventory has been overwhelming automakers, placing a strain on goal setting, and leading to increased backlogs.

As a result of overwhelming supply, the market is also witnessing a “price system collapse,” they said.

They pointed out that to prevent further losses, “dealers are forced to promote products at prices below cost,” resulting in a decline in the industry’s credibility.

The dealers warned that dumping could violate China’s Anti-Unfair Competition Law; a revised version is set to go into effect on Oct. 15. In anticipation of this deadline, automakers appear to be aggressively offloading inventory.

The latest complaints show how dealers are struggling with an ongoing price war that erodes profit margins. The advent of the price war began in early 2023, sparked by Tesla’s price cuts that triggered an industry-wide response.

In 2025, cuts deepened across all segments. With state subsidies, BYD—China’s largest car manufacturer—slashed its BYD Seagull electric hatchback to 55,800 yuan ($7,750). Despite calls by ministry officials in May to halt what it called excessive competition, the price wars show no sign of abating.

Growing concerns over the price fallout mirror sluggish domestic demand with faltering economic confidence. Apart from weak consumption at home, the European Union, the United States, and other nations have implemented hefty tariffs on Chinese electric vehicles (EVs).
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A year-long investigation by the EU regulators found that Beijing had provided substantial state subsidies across almost every part of the EV supply chain, from sourcing raw materials and manufacturing batteries to assembling cars and transporting them to ports.

The European Commission concluded that Beijing’s practices resulted in a “threat of economic injury” to the bloc’s automakers.

As a result, Brussels imposed tariffs of up to 35 percent—on top of the current 10 percent—on EVs made in China last year, saying the step is necessary to level the playing field.
The EU’s move came after the Biden administration imposed fourfold tariffs on Chinese EVs from 25 percent to 100 percent last year.
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“China’s using the same playbook it has before to power its own growth at the expense of others by continuing to invest despite excess Chinese capacity and flooding global markets with exports that are underpriced due to unfair practices,” Lael Brainard, then-director of the National Economic Council, told reporters in May 2024, ahead of the tariff hike announcement.

“China’s simply too big to play by its own rules.”

Reuters contributed to this report.
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