The Chinese car price war is predicted to intensify further.

KatadataOTO – Currently, many Chinese car manufacturers are engaged in a price war. They are competing to offer significant discounts.

This is done to attract as many consumers as possible, thus making the competition unhealthy.

This situation has apparently drawn the attention of several parties because the price war is feared to have negative impacts.

Such as the threat of bankruptcy and layoffs (PHK), which have been occurring frequently lately.

Photo : KatadataOTO

However, the current Chinese car price war is being touted as just an appetizer.

“The competition will become tougher in the next five years,” said He Xiaopeng, CEO of Xpeng, as quoted by CNBC, Saturday (07/06).

The executive of this Chinese electric car manufacturer said that the ongoing price war has not yet reached its peak.

Therefore, he revealed that the competition among four-wheeled vehicle companies in the Land of the Bamboo Curtain will become increasingly fierce.

“This is just an appetizer for what is to come,” Xiaopeng emphasized.

A similar sentiment was echoed by an analyst from Nomura. He said the competition among Chinese manufacturers has not yet reached its highest point.

“Given the current oversupply situation in the Chinese automotive market, we believe the most intense phase of competition has not yet occurred,” he said.

The Chinese Government is Fed Up

On the other hand, China's Ministry of Industry and Information Technology has tried to warn BYD, Geely, Chery, and other manufacturers not to continue the price war.

“Reckless price cuts can damage investment in research and development (of products),” said an official from MIIT (China Ministry of Industry and Information Technology) to Xinhua.

In addition, discounts from Chinese car manufacturers are also seen as potentially lowering the quality of their products and services. This could then lead to safety issues that harm consumer rights.

“There are no winners in a price war. Let alone a guaranteed future,” he continued.

MIIT will also strive to control detrimental competition in the automotive sector. One way is by encouraging improvements in the industrial structure and strengthening random inspections to maintain product quality.

Photo : Carnewschina

Furthermore, they will also collaborate with relevant authorities to combat unfair competition and plan to create regulations if necessary.

As a reminder, BYD is one of the Chinese electric car manufacturers that offered discounts on 20 of its product models.

The price cuts offered by BYD were apparently met with a response from its competitors, starting with Geely and Chery, who employed similar strategies.