China Unveils Plan to Stabilize Auto Industry Amid Price Cuts and Export Pressures

China Moves to Stabilize Auto Sector Amid Price Wars and Export Challenges

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Beijing has unveiled a comprehensive plan aimed at stabilizing growth in its auto industry, which has been grappling with intensifying domestic price wars and mounting international trade pressures. According to state media reports, the initiative announced jointly by eight government departments sets forth a roadmap for 2025 and 2026, underscoring cost surveys, price monitoring, and measures to boost innovation and domestic demand.

The Chinese auto maker, long a key driver of national economic growth, recorded a 4.5% expansion in 2024, data from the China Association of Automobile Manufacturers shows. However, slowing global demand and fierce competition at home have clouded plan projects a modest 3% increases in total vehicle sales this year, bringing volumes to roughly 32.3 million units. Yet, in sharp contrast, new energy vehicles a sector in which Beijing has invested heavily, are expected to surge by 20%, with sales projected at 15.5 million units in 2025.

Despite the encouraging figures in electric mobility, the sector has been strained by what officials describe as irrational competition. A wave of startups has collapsed as automakers battle for market share by flooding the market with inexpensive models and aggressive trade-in schemes. In July, Chinese regulators urged companies to pivot away from short-term price slashing and toward sustainable growth strategies that prioritize quality, technological advancement, and brand strength.

Compounding domestic challenges are growing tensions abroad. The European Union launched an investigation in 2023 into whether Chinese automakers benefit from unfair subsidies, raising the specter of tariffs. More recently, Mexico announced plans to impose a steep 50% duty on Chinese car imports, up from the current 15–20%, a move that has drawn sharp criticism from Beijing.

With global headwinds mounting, the stabilization plan signals China’s intent to recalibrate its auto industry, balancing aggressive growth targets in EVs with a push for healthier competition and stronger resilience in export markets. For Beijing, the task ahead is not just to sustain sales but to reshape the sector into a more disciplined, innovative, and globally competitive force.