The competition in the Chinese automotive market has reached a white-hot level, with industry insiders indicating that apart from vicious price reduction, behaviors such as mutual undercutting between companies, cyber armies attacking, and malicious defamation are not uncommon. This has raised widespread concerns within the industry.
As the Chinese economy continues to stagnate, the automotive market is also on the decline. Faced with a shrinking market, car manufacturers are no longer limited to price reduction but are engaging in price wars to gain market share.
According to a report by “Huaxia Times” on June 13, a salesperson at an automotive brand store bluntly stated that their products are basically “directly targeting their neighboring competitors”. In situations where product configurations are similar, not only are their products more competitive, but they also try to keep prices as low as possible. This price competition is prevalent among different brands and even within the same brand, with different stores competing in price reduction. A salesperson at an Audi 4S store in Shijiazhuang City, Hebei Province, told the media that she could offer lower prices than 4S stores in Beijing.
To discredit their competitors, some car companies are even buying cyber armies to smear their rivals online. Reports indicate that this type of online public opinion manipulation targeting car companies is usually initiated by the demand from the background party, then centralized for dissemination through content production and account distribution, using a large number of accounts to rapidly spread negative information online. In this model, low-cost, rapid content production puts greater pressure on companies in terms of brand maintenance and public opinion response.
In April 2026, the founder of Ideal Auto, Li Xiang, publicly stated that a certain brand appeared to be conducting concentrated negative information dissemination on Ideal i6, L6, and other models through an external network team, including exaggerating issues and spreading false information.
The report cited automotive industry analyst Zhou Yue’s view that irrational competition in the automotive industry not only includes years-long price wars and below-cost predatory pricing but also encompasses mutual undercutting between companies, cyber armies attacking, and malicious defamation.
Price wars among car companies in the Chinese market have been ongoing for a long time. In early 2023, some electric car companies initiated price reductions, followed by a rapid response in the gasoline car market. Over the following three-plus years, what started as individual corporate actions of price reduction gradually evolved into an industry-wide phenomenon.
In 2025, there were 177 car models in the Chinese automotive market implementing price reductions, making low-price competition a norm in the industry. According to Cui Dongshu, Secretary-General of the CPCA, from January to May 2026, the average selling price of electric car models that had been reduced in price was 249,000 RMB with an average reduction of about 31,000 RMB, a decrease of approximately 12.5%. During the same period, the average selling price of gasoline car models with reduced prices was 223,000 RMB, with an average reduction of about 33,000 RMB, achieving a decrease of 14.6%. Looking at the overall passenger car market, the average selling price of reduced-price models from January to May was approximately 241,000 RMB, with an average reduction of about 32,000 RMB, representing a decrease of 13.1%.
Despite the intense price wars and malicious competition, the Chinese automotive market shows no signs of improvement. In May of this year, the inventory alert index for Chinese auto dealers rose to 57.9%, an increase of 5.2 percentage points compared to the previous year, surpassing the 50% threshold.
According to the China Passenger Car Association’s “May 2026 National Passenger Car Market Analysis Report” released on June 8, from May 1st to 31st, there were 1.51 million cars retailed in the Chinese passenger car market, a 22.1% decrease compared to the same period last year. And so far this year, there have been 7.099 million cars retailed, a 19.5% decrease compared to the same period last year.
In the tough market environment of sluggish car sales and malicious competition such as price reduction, Chinese car companies continue to introduce new models in hopes of capturing a share of the market. According to a report from “Daily Economic News” on June 14, at the 2026 China Auto Chongqing Forum held on June 12, Wang Xia, President of the Automobile Industry Committee of the China Council for the Promotion of International Trade and Chairman of the Automobile Industry Chamber of Commerce of the China Chamber of International Commerce, revealed, “In the first five months of this year, hundreds of new cars were launched, but sales have shrunk. The auto industry’s profit margin in the first quarter was only 3.2%, hitting a new low; at the same time, there was a slight decrease in revenue for the auto manufacturing industry on a year-on-year basis.”
William Li, founder of NIO, believes that car companies will face fierce market competition in the next year or two. “Huaxia Times” believes that these expressions from the top managements of companies to some extent reflect a general concern about the current competitive environment in the industry.