German car makers are struggling in China as the nation favours its own
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The world's biggest car market, China, is crucial for German car makers – but buyers are choosing domestically-designed models as European brands falter.
Chinese new car buyers are ditching German brands as they embrace locally-made models like never before – causing BMW, Mercedes-Benz and Porsche to regroup in the world's largest new-car market.
Chinese buyers once shunned locally-made cars, but Chinese brands made up more than half (52.8 per cent) of total passenger vehicle sales in China for the third consecutive month in September.
That's impacting foreign brands in China and, notably – following decades of growth – the fortunes of German car makers.
According to Carscoops, German brands recorded significant sales slumps during the third quarter (July-August-September) of 2024.
BMW posted the biggest drop of 30 per cent, with its Mini and Rolls-Royce brands falling 25 per cent and 16 per cent respectively.
Porsche sales fell 19 per cent, while Volkswagen sales were down 15 per cent, and Mercedes-Benz suffered a 13 per cent year-on-year decline.
That came as Chinese brands BYD, Li Auto and XPeng – which is scheduled to start Australian deliveries of its Tesla Model Y rivalling XPeng G6 in November 2024 – posted best-ever China sales in September.
While German cars still command 15.7 per cent of total new vehicle sales in China – a significant volume – they collectively made up 23.8 per cent as recently as 2019.
German vehicles remain the second-most popular in China – despite the recent sales declines – behind Chinese-produced models, and still well ahead of cars from Japan, South Korea, and the United States (US).
Year-to-date, BYD, Geely and Tesla were the best-selling brands in China between January and September 2024 – Volkswagen having taken the lead from BYD in January, only to fall back by September.
German brands aren't the only ones suffering in China, with Japanese car makers Nissan, Honda and Mitsubishi – the latter having exited China in 2023 – announcing a partnership in July 2024 to produce new electric vehicles together.
Sales across all Chinese brands in September 2024 rose 18.8 per cent compared to August, and 45.5 per cent over the same period in 2023.
The growth came entirely from New Energy Vehicles (NEVs), the term used by China – which includes hybrid, fuel-cell and battery-electric vehicles – as government subsidies announced in July looked to counter a slowing economy.
German car makers are looking to bounce back with China-specific models and sub-brands, with Audi dropping its famous four rings for a China-only model line, which may also drop the Audi name.
While all major German brands have factories in China, also influencing their success is the European Union's recent decision to apply tariffs to Chinese-made electric vehicles across its 27-member nations.
The EU includes Germany, which was one of the countries to vote against increasing tariffs, with China retaliating by announcing it will look at introducing import tariffs of its own on "large engine capacity" vehicles.
The move, seen as Beijing applying pressure to influence the decision ahead of the 31 October 2024 deadline to finalise the tariffs, was described by French President Emmanuel Macron as "pure retaliation".
China overtook Japan to become the world's largest exporter of new cars in 2023, according to Automotive News.
Volkswagen suggested in September 2024 that it may have to close factories in its home country, Germany as the nation – according to the car maker – falls behind as a manufacturing centre
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