TAIPEI (Taiwan News) — Following the COVID pandemic, China’s automobile industry was given priority status as an industrial segment in need of economic revitalization.

Few have taken the bait of government subsidy programs for new vehicle purchases, leading automakers with little choice but to slash prices further. Many automakers are now jettisoning profits for the sake of survival, per CNA.

For example, a promotional poster for BMW’s new 120iM-Sport released by a distributor in Fujian, offers a promotional price of NT$574,000 (US$18,812). This is a discount of 38.2% over the auto’s suggested sticker price.

BMW is one of the last automakers in China to engage in a price war. Volkswagen, Audi, and Mercedes-Benz have already cut prices by as much as NT$305,000 (US$10,000). Honda offered a price cut of only around NT$100,0000 (US$3,000).

Chinese media reported that price cuts in the auto market began with Tesla and BYD slashing prices on electric vehicles (EVs). The cuts soon spilled over to traditional fossil fuel vehicles, leading to price cuts at some 30 different car brands.

In addition to price cuts, consumers are also being spurred on to buy new autos through subsidy programs backed by car manufacturers, regional dealers, and even local municipalities. Many of the subsidy programs dramatically lower the purchase cost of a new car.

For example, Hubei Province, where Dongfeng Motor (DFM) is located, provides a subsidy of up to NT$400,000 (US$13,125) to local consumers who purchase a DFM vehicle. This means a Citroen C6 is available to Chinese people for only NT$518,000 (US$17,000).

Henan Province provides a 5% subsidy for new cars made and purchased in the province. And other provincial-level administrative regions such as Zhejiang, Henan, Sichuan, Yunnan, and Hainan have also offered a range of subsidies for new car purchases.