According to the statement, Alibaba signed a framework agreement over the weekend with Deyin Investment, STO's biggest shareholder, which will devolve a combined 46 percent stake in the company to two new units that will be soon created.

"Cutting inventories and recovering costs are acceptable business practices, but attention should be paid to prevent such acts from devolving into price wars," said the China Association of Automobile Manufacturers in a statement on Wednesday.