CAAM Removes Clause About Car Companies Not Engaging in “Price Wars”

Recently, the China Association of Automobile Manufacturers organized 16 automobile production companies including NIO and Ideal to sign the “Commitment Letter for Maintaining Fair Market Order in the Automotive Industry”. On the 8th, the association issued a statement on its official website stating that the previous commitment letter’s mention of “disrupting market fair competition order with abnormal prices” involving “prices” was expressed improperly. Therefore, this clause has been removed from the commitment letter.

The association also urged these 16 companies and other member enterprises in automobile production to strictly abide by the Anti-Monopoly Law, relevant administrative regulations, guidelines, and rules; independently set prices; engage in fair competition; and jointly contribute to standardized, healthy, and innovative development of the industry.

At the 2023 China Automotive Forum held in Shanghai on July 6th, representatives from multiple automotive companies signed a document called “Commitment Letter for Maintaining Fair Market Order in the Automotive Industry.” It is reported that the car manufacturers who signed the commitment letter include FAW, Dongfeng, SAIC, Changan, BAIC, GAC Motor, Foton Motor, Chery Automobiles, JAC Motors, Geely Auto, Great Wall Motors (GWM), BYD, NIO, Li Auto, XPeng, and Tesla.

This “Commitment Letter” aims to fulfill the obligation of industry associations to maintain fair market competition, as stipulated in Article 14 of the Anti-Monopoly Law, which states that industry associations should strengthen self-discipline within the industry, guide operators in the industry to compete lawfully and operate in compliance with regulations.

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The specific content includes: Firstly, adhere to industry rules and agreements, regulate marketing activities, maintain a fair competition order, and avoid disrupting the market with abnormal prices.

Secondly, pay attention to marketing and promotional methods, avoiding exaggerated or false advertising that misleads or attracts customers. In addition, automobile companies promote the spirit of craftsmanship that prioritizes quality and adheres to high-quality products and services to meet people’s needs for a better life.

Lastly, automobile companies also actively fulfill their social responsibilities by promoting socialist core values and making important contributions to national stability in economic growth, confidence building, and risk prevention.

The expression of prices in the “Commitment Letter” has sparked controversy. Just 2 days later, the China Association of Automobile Manufacturers (CAAM) issued a public correction of information. Some industry insiders have expressed that price wars are market behaviors in business competition, and the automotive industry is no exception. The signatories of the ‘Commitment Letter’ basically include most mainstream car companies, with the aim to maintain market stability. However, the ultimate effect will depend on the implementation by each car company in the future.