China warns its car brands against overseas price wars

China has issued a series of guidelines on how its automakers should behave in export markets such as Australia, with directives to avoid aggressive pricing to gain an ‘improper advantage’, follow local laws and build better after-sales support.

As reported by Nikkei, the guidelines were published on September 1, 2026 by China’s Ministry of Commerce and Ministry of Industry and Information Technology, in collaboration with the country’s State Administration for Market Regulation.

The guidelines state they’re intended to “promote orderly and healthy international development of China’s automotive industry” and thereby “advance the development of the global automotive industry”.

Key elements include directives on pricing, establishing better after-sales customer support, and ensuring customer data from connected vehicles is collected in accordance with each country’s laws.

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According to the new guidelines, Chinese automakers operating overseas “must not disrupt the order of market competition to obtain an improper competitive advantage”.

Price wars in the competitive Chinese market have eroded profitability for automakers, making exports to overseas markets an increasingly attractive means to offset this.

Between January and July 2026, China exported 72.5 per cent more passenger vehicles than during the same period the previous year, sending around 5.3 million passenger vehicles overseas, according to the China Association of Automobile Manufacturers (CAAM).

The guidelines, however, state Chinese automakers “should avoid creating disorder among sales channels” when operating overseas. They also “must not improperly impose arbitrary surcharges beyond the displayed price or collect fees that have not been disclosed”.

China is the world’s largest producer of new vehicles, with its industry producing around 34.5 million in 2025, compared with 13.5 million in the European Union, 10.2 million in the United States and 8.4 million in Japan, according to the International Organization of Motor Vehicle Manufacturers.

The guidelines follow calls from the Chinese government in mid-2025 to end hyper-competitive price wars, with authorities describing them as “irrational competition” that limited the long-term sustainability of the more than a hundred vehicle brands competing with each other.

The government has also cracked down on so-called ‘zero-mileage’ cars, a term used to describe vehicles made in China and counted towards a brand’s domestic sales figures before being exported as ‘used cars’ with next-to-no kilometres on their odometers.

Earlier this year, William Li, CEO of Chinese brand Nio, said the Chinese auto industry’s ‘golden era’ was over, after prices had been cut to the point where there was little profit margin left, meaning consumers in China and elsewhere would have to pay more for new cars.

“We wanted to reduce the size of the discount gap and make the reservation incentives more conservative and restrained,” Mr Li said.

In Australia, Chinese cars make up an increasing share of the market, with the Shanghai-produced Tesla Model Y becoming the first Chinese-made vehicle to top local sales in May and June 2026.

Despite this, the cheapest car in Australia remains the Kia Picanto city car, starting at $19,190 before on-road costs, which is made in South Korea, where Kia is based.

Yet the cheapest electric vehicle offered here is the BYD Atto 1 city hatch, priced from $23,990 before on-road costs; the cheapest hybrid is the MG 3 hatchback, while the cheapest plug-in hybrid (PHEV) is the BYD Sealion 5 – all Chinese models.

The cheapest commercial van sold here is also Chinese, the LDV G10+, while the cheapest ute is the LDV T60 Max Pro.

In late 2025, Chery Australia chief operating officer Lucas Harris told CarExpert the brand wouldn’t participate in a ‘price war’ among Chinese brands, despite launching the Chery Tiggo 4 as the cheapest SUV in new-car showrooms.

“If we are chopping and changing pricing dramatically all of the time, that has a really bad impact on residual values for customers. It’s about consistency and earning the right to sell them another car,” Mr Harris said.

The new guidelines also task Chinese brands with following “applicable laws and regulations” and “local commercial practices” to “properly perform their contractual commitments”.

A good example to follow may be Xpeng Australia and New Zealand’s (ANZ) pledge to honour $5000 cashback offers for buyers of the G6 SUV sold under its previous Sydney-based importer, TrueEV, after the factory took over operations earlier this year.

The guidelines also suggest Chinese brands should carry out due diligence before exporting vehicles to overseas markets.

“Companies should strengthen their assessment of products before introducing them into overseas markets and avoid exporting products that do not meet the requirements of the target market or its operating environment,” Article 11 of the document states.

It also calls for pricing transparency for customers, better ‘quality management’ and after-sales support, while ensuring the collection of data from connected vehicles – cars connected to the internet – is carried out legally.

MORE: Chinese car price war ending as costs rise – report