Core Viewpoint - The Chinese automotive industry is experiencing intense competition, particularly in the electric vehicle sector, leading to a "price war" that has prompted the National Market Supervision Administration to draft the "Automotive Industry Pricing Behavior Compliance Guidelines" to establish a fair competitive environment and promote high-quality development [2][4]. Group 1: Price War and Its Impact - The automotive market has undergone four major price wars in the past three years, with over 90% of mainstream brands participating and an average price reduction of 15%, with some models seeing discounts exceeding 30% off the official price [3]. - As of mid-2025, the proportion of automotive dealers reporting losses rose to 52.6%, an increase of 8.3 percentage points year-on-year, with 74.4% of dealers selling vehicles below cost, leading to direct economic losses [3]. - The industry's profit margin has declined from 7.8% in 2017 to 4.3% in 2024, with a further drop to 4.1% in the first four months of this year, representing a nearly 60% decrease compared to the 10.2% margin during the industry's peak in 2012 [3][4]. Group 2: Regulatory Response - The newly introduced guidelines require companies to establish pricing strategies based on production costs and market demand, implementing comprehensive price management across the entire supply chain [4]. - The guidelines explicitly outline nine scenarios of "selling below cost" and seven types of price fraud, providing clear legal boundaries for companies and addressing the core issues of the ongoing price war [4][6]. Group 3: Industry Response and Future Outlook - Major automotive companies, including BYD and Xpeng Motors, have quickly expressed support for the guidelines, committing to optimize their pricing management systems and ensure compliance [5]. - The "National Subsidy" policy is set to continue through 2026, with a significant increase in funding for consumer goods replacement, indicating a strong governmental push to stimulate consumption and promote industry upgrades [6][7]. - The automotive industry has seen a revenue increase of 7.9% and profit growth of 4.4% in the first ten months of this year, with profit margins recovering to 4.4%, suggesting a shift away from aggressive price competition [7][8]. - The production and sales of new energy vehicles have also shown significant growth, with a year-on-year increase of 31.4% and 31.2% respectively, further enhancing China's market share in the global electric vehicle sector [8].