BEIJING, May 31 (Xinhua) -- The China Association of Automobile Manufacturers (CAAM) has initiated an industry-wide appeal urging automakers to refrain from engaging in disorderly competition within the nation's rapidly growing new energy vehicle (NEV) market.

In a recent statement, the CAAM highlighted that while China's NEV industry has experienced significant expansion, with electric vehicles making up over 40 percent of new car sales, profitability has suffered due to what it refers to as "involution-style" competition characterized by chaotic price wars.

The organization underscored the necessity of continuous investment to ensure robust product offerings and to foster innovation. However, the ongoing price wars are causing major disruptions in business operations, jeopardizing the stability of industrial and supply chains, and trapping the sector in a detrimental cycle.

The CAAM further noted that a series of sharp price reductions triggered by a leading car manufacturer on May 23 have subsequently incited a wave of market panic among competitors.

Such price wars, the CAAM warned, are not only eroding profit margins but are also compromising service quality and putting the overall development of the industry in jeopardy. This situation poses risks not just to the companies involved but also endangers consumer rights and could lead to broader safety concerns.

The association emphasized that all companies must adhere strictly to fair competition principles. Leading enterprises, in particular, should refrain from creating monopolistic conditions at the expense of their competitors.

The CAAM advised that, aside from lawful adjustments in pricing, firms should not sell products below cost, engage in misleading marketing tactics, or disrupt market order in a manner detrimental to the fundamental interests of the industry and consumers.

In addition, the CAAM encouraged companies to undertake self-inspections in accordance with relevant national laws and regulations. Such measures are crucial for maintaining the integrity and sustainability of the NEV market.