Automobile component manufacturers that unjustifiably raise prices when supply and demand imbalance strikes supply chains would also face action.Automakers and dealers in China could face a regulatory crackdown on unfair pricing under draft regulations from the market watchdog in response the a crippling domestic price war.
As intense competition in China hammers profitability at automakers, suppliers and dealers, regulators have called for a halt to a price war that is now in its third year.
Unfair price behaviour will be in the regulatory crosshairs and a mechanism will be created to flag risks associated with remarkably low prices, the State Administration for Market Regulation said on Friday.
Automakers and dealerships selling vehicles for less than cost through discounts, incentives or other methods would be exposed to major legal risks, it said without specifying the penalties for violations.
Automobile component manufacturers that unjustifiably raise prices when supply and demand imbalance strikes supply chains would also face action.
The regulations will promote price transparency, maintain supply chain safety and stability and safeguard the long-term interests of consumers, the China Association of Automobile Manufacturers said.
The regulator is seeking public comment until December 22.
