Chongqing - Zhu Huarong, Chairman of Changan, stated that although the ongoing price war in China's automotive market is intense and challenging, it marks the beginning of the industry's return to healthy development, at the 2024 Annual General Meeting of Shareholders for Changan Automobile on May 27.

On May 27, Changan Automobile Chairman Zhu Huarong presented the company's overall performance for 2024 at the Changan Automobile Annual General Meeting of Shareholders. (Photo/Changan)

The recent resurgence of the price war in China's automotive sector was sparked on May 23, when BYD launched limited-time "subsidized prices" or "fixed prices" for its models. Just days later, on May 26, Geely followed suit, announcing limited-time subsidies.

Among the companies engaged in this price battle, BYD and Geely are the main competitors. Both companies, with their strong sales performance, have become the central forces in the market. According to the CAERI Automotive Index, in April 2025, Geely's GEOME model became the best-selling vehicle in China, with 36,119 units sold, followed closely by BYD’s Seagull, which sold 34,005 units.

Both the GEOME and Seagull are compact electric vehicles with similar positioning, making them direct competitors. Data from the China Passenger Car Association (CPCA) shows that in the first four months of 2025, Geely’s retail sales reached 825,000 units, a 63.6% year-on-year increase, while BYD’s retail sales amounted to 965,000 units, with a much slower growth rate of 14.9%.

Encountering the competition, Changan faces pressure on its sales. According to CPCA data, from January to April 2025, Changan's retail sales dropped by 10.6% year-on-year, selling 418,000 vehicles.

Meanwhile, Changan’s gross margin in the first quarter of 2025 was 13.9%, an 8.43% increase from the previous year, indicating some resilience. Despite this, Changan’s gross margin is relatively low compared to its competitors, with BYD at 20.07% and Geely at 15.8%, highlighting the increased competitive pressure on Changan.

Zhu acknowledged that the industry is facing certain risks, but emphasized that capital markets, investments, and business operations will become more rational and efficient. He believes the industry will return to a path of healthy value-driven growth within the next two years.

This ongoing price war has also significantly squeezed profit margins in the Chinese automotive industry. According to data from the National Bureau of Statistics, the sales profit margin for China's automotive manufacturing industry in the first four months of 2025 was just 4.1%, marking a 5.1% year-on-year decrease.