BBA Sales Slide, Dealers Shift to NEVs as Luxury Car Market Reshapes

At the start of Q2 2026, China's auto market showed signs of weakness, with overall vehicle sales in April declining by 21.5% year-over-year. Despite the Beijing Auto Show reaching a record-breaking scale, it failed to effectively boost market sentiment. At the end of April, the three premium German brands—Mercedes-Benz, BMW, and Audi (collectively known as BBA)—each reduced their sales targets and wholesale performance benchmarks for dealerships by approximately 20%, 24%, and 22%, respectively. However, most dealers reported that these adjustments provided limited relief. Currently, 4S store profits primarily rely on three sources: after-sales service, financial commission rebates, and new car sales. Among these, new car sales are generally unprofitable, financial rebates are constrained, and after-sales services have become virtually the sole source of profitability. Some dealers have already begun shifting toward domestic new energy vehicle (NEV) brands. By the end of 2024, Beijing Huayang Aotong and Zhengzhou Zhongsheng Huidi—both previously Audi A-class dealers—announced their switch to Huawei-backed Aito (Wenjie). Huayang Aotong planned to stop selling new Audis while retaining its after-sales operations, but FAW Audi immediately terminated its authorization and issued warnings to other dealers. Industry satisfaction continues to decline. In 2025, dealers’ average satisfaction score with OEMs dropped to 53.37—the lowest since records began in 2014—with over 90% of dealers expressing dissatisfaction with the brands they represent, particularly among luxury marques. In Q1 2026, the number of Mercedes-Benz and BMW outlets in Beijing decreased, while stores of domestic brands like NIO and Xiaomi expanded. Some 4S investors revealed that individual stores are losing RMB 2–3 million annually yet continue operating under duress. BBA faces mounting pressure as its market share is rapidly eroded by high-end domestic NEV brands. According to data from Gaogong Intelligent Automotive Research Institute, in China’s passenger vehicle segment priced above RMB 300,000, domestic brand market share rose from 24.9% in 2023 to 40.97% in 2025 and is projected to surpass 50% for the first time in 2026. In April 2026, among BBA’s NEV models, only the BMW i3 and Audi Q4 e-tron exceeded 1,000 units in monthly sales, while cumulative sales of the all-electric Mercedes-Benz CLA remained below 2,000 units. To address these challenges, BBA plans to launch a new generation of electric vehicles over the next two years, including the BMW Neue Klasse iX3, the all-electric Mercedes-Benz GLC, and the Audi E7X. However, market acceptance of these upcoming models remains uncertain.