BYD and SAIC Push Suppliers to Reduce Prices for 2025
Recent reports have surfaced indicating that both BYD and SAIC have exerted pressure on their suppliers to reduce prices for the year 2025. This move suggests that the ongoing price war in the automotive industry is far from over.
Earlier, there were anecdotal accounts suggesting that suppliers were being compelled to sell their products to manufacturers at prices below their production costs in order to secure higher volumes. The latest reports only serve to corroborate these claims.
BYD’s Executive Vice President, He Zhiqi, sent an email proposing a 10% reduction in the prices paid to suppliers starting from January 1, 2025. On the other hand, SAIC’s Maxus division also followed suit by sending a letter to suppliers on November 25, inviting them to participate in a cost-control project aimed at reducing costs by 10%.
Maxus outlined five measures for suppliers to collaborate on cost reduction. These include creating competitive raw material procurement solutions, process improvement suggestions, value analysis and engineering, logistics optimization, and fostering long-term relationships for future cost-saving initiatives.
In response to the situation, BYD’s GM Li Yunfei stated that annual negotiations with suppliers are common in the automotive industry. He emphasized that the proposed price reductions are not mandatory and can be subject to negotiation and promotion.
SAIC Maxus has not issued an official response. However, the company anticipates that volume cost will be a prevailing theme in the Chinese automotive sector in 2025. The market’s supply-demand imbalance is expected to persist, further intensifying the price competition.
BYD has called for a unified effort across the supply chain to continue driving down costs. Suppliers are expected to submit their revised prices to BYD before December 15.
Sources: Autohome, Fast Technology
