Amid mounting concern over a new round of price wars in China’s new energy vehicle (NEV) market, the China Association of Automobile Manufacturers (CAAM) and the China Iron and Steel Association (CISA) have issued a joint call for industry-wide self-discipline, urging enterprises to resist excessive competition and protect the integrity of the industry chain.
In May 2025, several automakers slashed prices for NEVs, sparking a panic in the auto industry and threatening the stability of supply chains. CAAM has appealed to automobile companies to reach a consensus, curb “involution” (a term used to describe destructive internal competition), and prioritize technological innovation and fair competition.
The initiative has been endorsed by the Ministry of Industry and Information Technology (MIIT), which highlighted the damage caused by aggressive pricing tactics. MIIT officials stated that such "disorderly competition" not only weakens product quality and service standards but also harms consumer interests and jeopardizes the industry's long-term viability.
China’s auto output hit record highs in 2023 and 2024, surpassing 30 million vehicles as NEV adoption soared. However, profitability has plunged: according to the National Bureau of Statistics (NBS), the auto industry's profit margin declined from 7.3% in 2018 to just 4.3% in 2024, dropping further to 3.9% in Q1 2025. The 2024 NEV price war alone caused nearly RMB 200 billion ($28 billion) in retail losses.
The steel industry, a critical supplier to automakers, has also suffered under the strain. In 2024, the auto sector consumed 40 million metric tons of steel plate, including 29 million mt of cold-rolled steel (CRC and HDG). However, steelmakers have reported growing pressure as automakers demand price cuts of over 10% and extend supplier payment periods, actions described by CISA as unsustainable and harmful to industrial health.
CISA is now urging steel producers and carmakers to cooperate, resist destructive pricing, and preserve a fair and orderly market environment. Both associations emphasized that collaboration across the supply chain is essential to ensure sustainable growth and innovation in the face of rising competition and global economic uncertainty.
VietnamSteel by Hoa Sen Group
