Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that, after experiencing a fierce price war started by Tesla, the Chinese auto industry ushered in an important moment. Witnessed by relevant government agencies, the China Association of Automobile Manufacturers (CAAM) and 16 auto companies signed the “Letter of Commitment to Maintain a Fair Market Order in the Auto Industry.” These 16 auto companies, including Tesla China, account for more than 90 percent of the Chinese auto market share. The Letter of Commitment requires auto companies not to disturb the order of fair competition in the market with abnormal prices, and at the same time not to exaggerate and falsely advertise. Tesla was the first to start a price cut frenzy. CAAM said the Commitment ensures that all parties will abide by industry rules and regulations, standardize marketing activities, maintain a fair competition order, and not disrupt the market’s fair competition order with abnormal prices. It also requires all parties to “carry forward the core values of socialism,” actively fulfill social responsibilities, and take active roles in stabilizing the economic growth, strengthening market confidence and preventing risks. Industry insiders expressed the belief that the Letter of Commitment is also a normative measure by the Chinese government against this year’s large-scale price war and unfair competition among car companies.
Source: Sina, July 7, 2023