Chinese auto market: Govt unveils plan to 'stabilise' sector; emphasis on 'cost surveys and price monitoring'

China rolled out a two-year plan aimed at easing turbulence in its car industry, where aggressive price cuts and trade disputes have weighed heavily on growth.

State news agency Xinhua said the programme, covering 2025 and 2026, was issued jointly by eight government departments. It places emphasis on “cost surveys and price monitoring” while urging carmakers to step up innovation and stimulate home demand.

The sector is expected to see sales of about 32.3 million vehicles this year, a rise of 3%. That is slower than the 4.5% expansion recorded in 2024, according to data from the China Association of Automobile Manufacturers.

Beijing has funnelled significant funds into the electric vehicle sector, hoping to position the country as a global leader. The new plan sets an ambitious target of 15.5 million new energy vehicles to be sold in 2025, representing 20% year-on-year growth.

Yet the industry is under pressure from a cut-throat price war. Cheap models and trade-in deals have flooded the market, pushing many smaller firms out of business. At a meeting in July, officials urged carmakers to abandon “irrational competition” in favour of healthy development.

China’s drive to export more vehicles is also meeting resistance. The EU launched a probe in 2023 into possible unfair competition in the sector, and this week Mexico announced plans to hike tariffs on Chinese car imports to 50% from the current 15–20%, a decision that sparked an angry response from Beijing.