China rushes to stem price war in autos as passenger car sales drop nearly 20% in January

China moved on Thursday to curb a fierce price war among automakers that has caused massive losses for the industry, after passenger car sales dropped nearly 20% in January from the year before, the fastest pace in almost two years.

The State Administration for Market Regulation released guidelines for manufacturers, dealers and parts suppliers aimed at preventing a race-to-the-bottom price war.

They ban automakers from setting prices below the cost of production to “squeeze...