Core Viewpoint - China is the world's largest automotive market, but it faces significant challenges in transitioning from a major automotive country to a strong automotive power, including issues like intense competition, false advertising, and a focus on scale over profitability [1][3]. Industry Challenges - The National Development and Reform Commission has identified issues such as "false advertising" and "price wars" in the automotive industry as key areas for rectification [3]. - The automotive industry has seen a drastic reduction in vehicle prices, with some models dropping from over 220,000 yuan to around 120,000 yuan, raising concerns about quality [3][5]. - Price wars have led to a decline in profit margins, with the automotive industry's profit rate dropping to 3% in 2024, and 41.7% of dealers reporting losses [5][9]. Impact on Supply Chain - The pressure from price wars has resulted in significant financial losses for suppliers, with one new energy vehicle company causing 1.8 billion yuan in bad debts for 37 suppliers due to inflated sales figures [6][13]. - The practice of squeezing suppliers has led to a reduction in R&D investments, with some companies cutting R&D spending by 62% [6]. Long-term Strategies - Great Wall Motors has adopted a strategy of "retreating to advance," focusing on high-value products and increasing R&D investment to 10.4 billion yuan in 2024, which is 5.2% of its revenue [11][12]. - The company emphasizes quality and technological innovation over participating in price wars, with a commitment to maintaining a healthy relationship with suppliers and dealers [7][11]. Industry Transformation - The automotive industry is urged to shift from "price wars" to "value creation," with the government emphasizing the need to eliminate low-price dumping and false advertising [9][16]. - Great Wall Motors is building a "forest ecosystem" that promotes collaboration and resource sharing among its subsidiaries, aiming for a more integrated supply chain [13][14]. Quality and Integrity - The call for industry integrity is echoed by Great Wall's chairman, who advocates for transparency and accountability in advertising and production practices [8][16]. - The focus on quality and technological advancement is seen as essential for the sustainable development of the automotive industry in China [17].