China tightens price regulation as domestic car sales sink 16%

Automotive exports surge 45% amid local slowdown.

The State Administration for Market Regulation issued nationwide rules to regulate pricing in China’s automotive industry, aiming to eliminate irregular practices and restore fair competition, according to GlobalData.

Under the new policy, companies must provide transparent price marking and establish internal compliance systems to track pricing behaviour.

This follows a decline in domestic deliveries in the automotive sector, which fell 16% to 1.7 million units in January, whilst exports rose 45% to 681,000 units.

The decline is due to a reduction in vehicle sales incentives, according to data from the China Association of Automobile Manufacturers.

Profit margins for dealers have fallen since 2017, with over half recording losses in the first half of 2025 due to oversupply and low demand.

Regulators identified practices including misleading price labels, hidden fees, and “zero-kilometre” cars sold as new. The new rules require price marking and internal compliance systems.

Madhuchhanda Palit, Senior Automotive Analyst at GlobalData, said the guidelines respond to price wars that hurt innovation, as they require internal pricing controls and traceability.

She added that smaller firms and dealerships face administrative costs, whilst schemes involving hidden-fee bundles or feature unlocks face scrutiny.

The industry is preparing for shifts in pricing strategy. Whilst smaller players must make adjustments, the policy aims for a market based on value and innovation.

Major manufacturers including BYD, Xpeng, Great Wall Motor, Chery, and BAIC pledged to follow the guidelines, according to GlobalData.

BYD stated it will build systems to track pricing across vehicle sales, financial services, and parts supply, whilst Xiaomi EV promised to strengthen compliance and transparency.