Volkswagen, Mercedes, BMW, and Porsche have all reported sharp declines in sales in China during the second quarter, as consumer purchasing power weakens and domestic automakers increasingly dominate the world's largest automotive market.
According to data released by the companies, Volkswagen's sales in China for the second quarter fell by 36,6% compared to the same period last year, totaling 491.400 vehicles. Mercedes saw a 19% drop, BMW a 13% decline, and Porsche experienced a significant 41% decrease. Cumulatively, all four brands sold fewer vehicles in the first half of the year compared to the first half of 2025.
China was once a highly profitable market for German automakers. However, in recent years, domestic brands such as BYD, Geely, and Chery have consistently expanded their market share, driven by electric vehicles, new technologies, and competitive pricing.
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A vlogger introduces the Mercedes-Benz GLC SUV model at the Auto China 2026 car exhibition in Beijing on 24/4. *Photo: AP*
Many German automakers, conversely, still rely heavily on internal combustion engine models or have been slow to refresh their electric vehicle lineups. This has created significant challenges as Chinese consumers rapidly transition to electric and plug-in hybrid vehicles.
Stephen Dyer, Asia director at consulting firm AlixPartners, noted that Chinese automakers are not only competing on price but also developing products at a faster pace. They consistently add new features, shorten vehicle launch times, and better cater to customer preferences than their foreign counterparts.
Beyond competitive pressures, the Chinese automotive market is also grappling with slow economic growth and a prolonged real estate crisis. An ongoing price war among automakers has further prompted many consumers to delay purchasing decisions, anticipating continued price reductions.
Volkswagen has announced plans to reduce its vehicle offerings in China by approximately one-half, focusing on models with higher competitive potential. The company expects this strategy to enhance business efficiency in its most crucial market.
According to the China Association of Automobile Manufacturers (CAAM), passenger car sales in the country dropped by 24% in the first half of the year. AlixPartners forecasts that light vehicle sales in China could decline by approximately 10% for the entire year 2026 if consumer demand does not recover.
Ho Tan (according to AP)
