China Bans Below-Cost Car Sales to End Price War
On February 13, 2026, China enacted sweeping new regulations barring automakers from selling vehicles below cost, a move aimed at halting the brutal price war that has gripped the industry and slashed profits. The rules expand the official definition of vehicle cost to include a broader range of expenses and prohibit coercive rebate tactics long used to undercut rivals.
This regulatory shift comes as competition in the Chinese auto market reaches a fever pitch. Aggressive discounting, particularly in 2025, drove average transaction prices to unsustainable lows, putting pressure on profit margins across the board. Domestic leaders like BYD and foreign automakers alike felt the squeeze, prompting Beijing to step in.
The policy is part of a broader government strategy to stabilize the auto sector and encourage healthier, innovation-driven competition. That includes long-term goals like accelerating EV development and advancing next-generation technologies. Analysts see the crackdown on price cutting as a necessary corrective to prevent bankruptcies and maintain the integrity of supply chains.
According to OICA’s February 13 summary of major global automotive developments, the new regulation marks a turning point. While it may push vehicle prices higher in the short term, it also has the potential to restore profitability across the industry.
Although no direct quotes from Chinese officials accompanied the announcement, the measure aligns with previous state-led initiatives such as EV production quotas and subsidy overhauls.
The move also carries international weight. As China cements its dominance in electric vehicle production, global automakers are feeling the ripple effects. For U.S. manufacturers, the policy could offer modest relief by curbing the aggressive pricing of Chinese exports, especially as trade tensions and tariffs escalate.
China remains the world’s largest auto market, and decisions made in Beijing continue to shape global supply chains and investment strategies. This latest regulatory shift signals that the country is serious about reining in destructive pricing tactics while steering its auto industry toward sustainable growth.
Source: https://oica.net/02-13-2026-oicas-5-major-news-items-summarized/
