China's top market regulator has rolled out draft rules aimed at curbing cutthroat price wars in the automotive industry, warning automakers not to use discounts to crush rivals or lock up market share.

According to the State Administration for Market Regulation, the draft focuses on price compliance of the automotive industry, tightening price discipline at the manufacturing end, cleaning up conduct in new car sales, and pushing companies to build internal compliance systems to prevent violations before they occur.

The move comes as competition in the country's electric vehicle sector intensifies. Irregular price labeling, price fraud, and other irrational competition have distorted market order, the regulator said.

The draft would draw a clearer line around lawful price cuts, allowing reductions to clear inventory but barring practices designed to exclude competitors or establish dominance, it added.

Specifically, for automakers, the draft calls for end-to-end price management, from vehicle and parts production to sales and financing services.

Rebate and incentive policies must be explicit and contract-based, while dealers' autonomy in setting retail prices must be respected.

The rules ban price discrimination under equivalent conditions, prohibit collusion among manufacturers and parts suppliers, and clamp down on hidden or arbitrary charges.

Paid software or function unlocks must clearly spell out free periods and fee standards, bolstering consumers' right to know.

In addition, dealers face tougher rules on price disclosure and promotions, a long-standing flashpoint for consumer complaints. Showrooms and online platforms must clearly mark prices, separate vehicle prices from service fees and stop charging extras outside listed prices. Promotional offers must state their rules, time limits and conditions, while misleading price comparisons, fake discounts and broken price promises are explicitly outlawed.

Industry bodies swiftly backed the move. The China Association of Automobile Manufacturers said the guidelines give companies a practical map of legal red lines, helping them head off regulatory risks at the source. The China Automobile Dealers Association said the rules strike at the heart of disorderly competition, curbing aggressive pricing at the production end while forcing greater transparency at the sales end, including on online platforms.

Automakers including BYD, BAIC Group and Xpeng said they would align their pricing and compliance systems with the draft rules.

BYD said it would strictly regulate price competition and stamp out price fraud and unfair practices, while BAIC pledged to embed the guidelines across pricing, dealer management and promotions.

Xpeng said it would ensure transparency from vehicle pricing through after-sales services, vowing to protect consumers' right to know and choose.