China’s auto market kicked off the Lunar New Year of the Dragon with a new round of price wars, and the head of an industry association has weighed in.

Cui Dongshu, secretary-general of the China Passenger Car Association (CPCA), wrote in the headline of an article published yesterday that the price war in China’s passenger car market will remain fierce in 2024.

China’s new-energy passenger car sales reached 8.88 million units in 2023, surpassing the size of the country’s overall passenger car sales in 2009, Cui Dongshu said, adding that China’s passenger car sales in recent years peaked in 2017 at 24.2 million units.

With high growth rates over the next few years, 2024 will be a critical year for new energy vehicle (NEV) manufacturers to gain a foothold and competition is destined to be fierce, he said.

For traditional combustion-engine vehicles, NEVs at the same price will put enormous pressure on manufacturers, Cui said.

At the same time, fuel vehicles face problems such as slow updates and low intelligence, and rely more on favourable prices to attract consumers, he said.

From the perspective of new energy vehicles, as the price of lithium carbonate falls, the cost of batteries is reduced, and the cost of building cars also falls, while the scale effect brought about by the rapid development of new energy vehicles also makes profit margins increase, Cui Dongshu said.