Mercedes, BMW, and Audi All Sell Under 300,000 Vehicles in China in H1; Auto Margins Drop Below 4%

In the first half of 2024, Mercedes-Benz, BMW, and Audi all reported synchronized declines in global vehicle sales and revenue—their lowest revenue since 2022 and lowest sales since 2023. China emerged as the primary driver of this downturn, with all three brands selling fewer than 300,000 vehicles there: BMW sold 262,000 units, down 19.3% year-over-year; Audi sold 233,000 units, down 25.8%; and Mercedes-Benz sold 210,000 units, down 28.3%. In contrast, their global sales declines ranged only from 4.2% to 7.2% during the same period. Financial data shows that Mercedes-Benz generated €63.66 billion in revenue in H1 2024, a 4.1% year-over-year decline. Its earnings before interest and taxes (EBIT) stood at €3.45 billion, down 3.1% from €3.56 billion in the same period of 2023 and a sharp 67.1% drop from its 2023 peak. EBIT from its passenger car segment plummeted 66.2% year-over-year to €860 million, with just €50 million recorded in Q2 alone. Its adjusted sales margin fell to 4%, the lowest in six years. BMW reported H1 2024 revenue of €62.27 billion, down 8% year-over-year, and EBIT of €3.64 billion, a 37.4% decline compared to the prior-year period. EBIT from its passenger car business dropped 45.6% year-over-year to €1.97 billion. In Q2, profits from its automotive segment totaled €630 million—slightly below the €650 million generated by its financial services division. The automotive segment’s profit margin stood at 3.6% for H1 and fell further to 2.3% in Q2. Audi posted H1 2024 revenue of €29.18 billion, down 10.4% year-over-year. However, its operating profit rose to €1.12 billion—the only one among the three to post year-over-year growth—primarily due to cost controls, reduced provisions for carbon emissions compliance, and lower restructuring expenses. Its operating margin was 3.8%, still near multi-year lows. All three automakers attributed their underperformance in China to weak market demand, declining sales of premium internal combustion engine (ICE) vehicles, key models being in transition phases between generations, and intensified competition from domestic new energy vehicle (NEV) brands penetrating the RMB 300,000–500,000 price segment. In H1 2024, China’s passenger vehicle retail sales fell 20.2% year-over-year. In June alone, sales of traditional ICE passenger cars dropped 39% year-over-year, while NEVs accounted for 62.8% of total vehicle sales. To address mounting pressures, all three companies have initiated cost-control measures: Mercedes-Benz and BMW are emphasizing structural cost optimization and slowing long-term R&D spending. BMW has confirmed a voluntary departure program, while Mercedes-Benz has already implemented workforce reductions in China. Audi is leveraging synergies within the Volkswagen Group to reduce costs and plans to cut idle production capacity at its European plants. Regarding profitability outlooks, Mercedes-Benz expects its adjusted passenger car sales margin to remain between 3% and 5% by 2026, though actual performance may trend toward the lower end. BMW has revised down its automotive EBIT margin target from 4%–6% to 1%–3%. Audi lowered its full-year operating margin forecast from 6%–8% to 5%–7% and reduced its revenue guidance from €63–68 billion to €58–63 billion.