BYD asks suppliers to cut prices as China auto war intensifies

BEIJING: Chinese automaker BYD is asking its suppliers to cut their prices, in a sign that a brutal price war in the world's largest auto market is set to escalate.

Citing a leaked email dated Nov 26 from BYD, Chinese digital news outlet thepaper.cn reported today that the Chinese electric vehicle giant had asked one unidentified supplier to reduce its prices by 10% from Jan 1.

Reuters was unable to verify the email, screenshots of which were widely shared on social media. BYD did not respond to a request for comment.

However, a BYD executive said today on his Weibo account that the Chinese automaker sets price reduction targets for suppliers when making large-scale purchases.

These were negotiable and not mandatory, he added.

"Annual price negotiations with suppliers are a common practice in the automotive industry," BYD's brand and public relations department general manager Li Yunfei said in his post.

He did not refer to the leaked email.

BYD has become a relentless discounter in the price war that Tesla started in the world's largest auto market last year.

That aggressive stance has helped it unseat its US rival as the world's biggest seller of electric vehicles, even though most of BYD's cars are sold in China.

BYD topped China’s auto sales rankings with a 15.8% share of the overall market in the first nine months, while its sales of EVs and plug-in hybrids accounted for more than a third of the country’s total, industry data showed.

BYD was second only to the combined sales of VW's two joint ventures in China last year.

A separate news report by the China Securities Journal newspaper published today said that SAIC Motor's Maxus unit had also sent a letter to its suppliers this week asking them to help it reduce costs by 10% to cope with the price war and oversupply in the market.

SAIC did not immediately respond to a request for comment on the report.