China moves to curb auto price war after January PV sales drop 20%

China moved Thursday to curb a fierce price war among automakers that has caused massive losses for the industry, after passenger car sales dropped nearly 20 per cent in January from the year before, the fastest pace in almost two years.

The State Administration for Market Regulation released guidelines for manufacturers, dealers and parts suppliers aimed at preventing a race-to-the-bottom price war.

They forbid automakers from setting prices below the cost of production to "squeeze out competitors or monopolise the market." Violators may face "significant legal risks," the regulator warned.

The rules also target deceptive pricing strategies and price fixing between parts suppliers and auto manufacturers.

Passenger car sales in China fell 19.5 per cent in January from a year earlier, according to the China Association of Automobile Manufacturers. That was the biggest percentage drop since February 2024.

The 1.4 million passenger cars sold in January compared with 2.2 million units