(Bloomberg) -- SAIC Motor Corp.’s Maxus brand has joined market leader BYD Co. in seeking a 10% price cut from suppliers, another sign China’s auto price war will continue into next year.
Maxus, which sells electric and gasoline cars, told suppliers it required savings to “improve the ability to survive under the pressure of complex situations, with the goal of reducing costs by 10%,” according to a report in the China Securities Journal.
The push to cut component costs comes amid a broader price war for gasoline and EV brands that threatens the survival of smaller, sub-scale players against the biggest manufacturers like BYD and Geely Automotive Holdings Ltd.
BYD is also seeking 10% savings from suppliers from the start of next year, despite its growing profit margins, in a sign the market leader is bolstering its finances to further lower prices. A BYD executive separately defended the company, saying its request to suppliers was common in the auto industry, and the 10% demand wasn’t mandatory.
State-owned SAIC’s sales have declined sharply, while its domestic joint ventures with foreign brands like Volkswagen AG and General Motors Co. are also struggling.
The under-performance in the year to October has led to SAIC being outsold by BYD for the first time, with its own sales down 21% to 3.1 million units, less than the 3.2 million achieved by its Shenzhen-based rival. Maxus has sold almost 155,000 cars in the same period, down 14% year-on-year.
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