German Luxury Car Sales Slide in China as Domestic Premium Brands Gain Ground

In the first quarter of 2026, combined new vehicle sales in China for BMW, Mercedes-Benz, Audi, and Porsche totaled 380,000 units, a 17% year-over-year decline. Among them, Mercedes-Benz’s flagship all-electric EQS sold approximately 200 units in China in 2025—just one-tenth of its 2023 volume. During the same period, BMW Group reported a 23% year-over-year drop in net profit to €1.672 billion and an 8% decline in revenue to €31.007 billion. The sales slump comes amid the rapid rise of Chinese premium brands. The Hongqi S800, co-developed by Huawei and JAC Motors, starts at around RMB 700,000 and features Huawei’s latest intelligent driving assistance system and gesture-controlled doors. Its monthly sales have already surpassed the combined total of four models from the aforementioned German luxury brands in China. Policy changes have further intensified competitive pressures. Starting July 2025, China lowered the price threshold for imposing its luxury car consumption tax from RMB 1 million to RMB 900,000, requiring imported German luxury vehicles to pay an additional 15% tariff, thereby eroding their price competitiveness. In response, German automakers are adjusting their strategies in China. BMW chose Beijing as the global debut location for its flagship 7 Series and announced partnerships with Alibaba, Tencent, and Momenta to equip its China-market vehicles with localized AI assistants and driver-assistance systems. Audi, meanwhile, has teamed up with Huawei to integrate Huawei-developed intelligent driving assistance systems into its internal combustion engine models sold in China.