China bans the sale of cars below cost to contain the phenomenon of “price burning”
China announced the implementation of a law prohibiting automakers from pricing vehicles below cost, as part of its campaign to contain a war "Burning prices" Which invaded the largest automobile market in the world.
According to the directives issued today, Thursday, companies are prohibited from Car prices between manufacturers and suppliers, and prevented brands from forcing dealers to sell their cars at a financial loss.
Regulators obliged manufacturers of cars containing software to notify customers when the free software trial period approached. It is also prohibited to convert free features obtained at the time of purchase into paid subscriptions later.
The price war that has been going on for years has led to a radical change in the Chinese automobile industry, which contributed to the rise of giant companies such as "BYD"and"Tesla"while pushing smaller manufacturers – who had to lower their prices to keep up with the competition – to the brink of bankruptcy.
This fierce competition extended throughout the supply chain, with automakers requesting discounts from upstream manufacturers and extending payment periods – a practice that regulators sought to eliminate.
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