On Saturday, a leading industry organization voiced strong criticism towards car manufacturers who are igniting a “price war,” shortly after Chinese electric vehicle (EV) manufacturer BYD revealed extensive trade-in discounts, prompting rivals to follow suit.

The China Association of Automobile Manufacturers (CAAM) issued a statement on its WeChat account, highlighting that since May 23, a certain automaker has initiated a large-scale price reduction campaign, which has led to what they referred to as a “panic” in the market.

The CAAM cautioned that such chaotic competition could intensify harmful rivalries and negatively impact profits.

While they didn’t name any specific companies, BYD had recently announced appealing trade-in discounts on nearly 20 models, offering reductions of up to 34% on some vehicles.

For example, BYD’s most affordable model, the smart-driving Seagull, now starts at 55,800 yuan (about $7,800), down from 69,800 yuan, if traded in.

Shortly after, Leapmotor, a Chinese EV startup backed by Stellantis, also introduced similar discounts on two of its entry-level models, available until June 8.

Additionally, Geely Auto announced limited-time trade-in incentives for ten models, with the X3 Pro being priced at an impressive low of 44,900 yuan.

However, there’s a rising concern within the industry regarding what some have labeled “involution,” a term that describes intense competition leading to no real progress.

Wei Jianjun, CEO of Great Wall Motor, drew parallels between the current automotive market situation and the housing slump that began after property giant Evergrande’s defaults in 2021.

“The challenges we face today are akin to those from Evergrande,” he expressed in a recent interview with Sina Finance.

Beijing has heavily invested in the electric vehicle industry, aiding the development and production of cleaner battery-operated vehicles.

However, the CAAM urged major players in the market to act responsibly, stating, “Leading companies must not dominate the market.” They also emphasized that aside from legal discounts, companies should not sell products below cost or engage in misleading advertising.

This kind of behavior disrupts the market and is detrimental to both consumers and the industry at large, the statement concluded.

An unnamed official from China’s Ministry of Industry and Information Technology added that price wars would ultimately result in “no winners and no future,” according to a report by the state-supported Global Times on Saturday.