German Automakers’ Sales Plunge in China Amid Slowing Demand and Fierce Local Competition

In the April-June quarter of 2024, Volkswagen, Mercedes-Benz, BMW and Porsche reported China sales drops ranging from 30% to 41% versus the same period a year earlier. Volkswagen’s deliveries fell 36.6% to 424,300 vehicles, pulling its global sales down 8.6% despite gains in Europe and the Americas. For the first half of 2024, each of the four groups posted year-on-year declines exceeding 20% in the Chinese market, squeezing overall profits and offsetting gains elsewhere.

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China’s passenger-car sales fell 24% in the first half of the year to roughly 8.3 million, reflecting a prolonged property-sector downturn and weakened consumer sentiment. Strong competition from Chinese manufacturers, which are expanding abroad and frequently refreshing their model line-ups, has eroded market share for European brands. Analysts note that price wars and a shift toward electric vehicles—where Chinese sales are outpacing conventional fuel cars—have intensified the pressure on legacy German makers.

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Porsche described the environment as “challenging,” while Mercedes-Benz warned of a “significantly weaker overall market and macroeconomic environment.” Volkswagen announced it will slash its model lineup in China by up to half, a move aimed at concentrating resources amid the slump.

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Independent analyst Lei Xing labeled the quarterly declines as “some of the steepest seen for the German automakers in China.” Stephen Dyer of AlixPartners warned that “foreign automakers are going to have to fight for every share of (the) market.” Chris Liu of Omdia observed that German groups remain stronger in internal-combustion-engine vehicles than in electric models, a disadvantage as EV sales surge in China. Dyer added that Chinese firms’ rapid model updates give them a competitive edge over foreign rivals.

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• “challenging” — Porsche, statement

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• “a significantly weaker overall market and macroeconomic environment.” — Mercedes-Benz, statement

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• “foreign automakers are going to have to fight for every share of (the) market,” — Stephen Dyer, Asia-Pacific leader, AlixPartners

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• “German auto groups remain much stronger in making internal combustion engine vehicles, such as gasoline cars, than electric vehicles, said Chris Liu, with the research and advisory group Omdia, at a time when EVs sales in China are doing better than conventional fuel vehicles.” — Chris Liu, Omdia

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• “Chinese carmakers also have a competitive edge over foreign automakers as they typically update their model lineup a lot more frequently than their rivals, Dyer added.” — Stephen Dyer, AlixPartners

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• “The German automakers are bearing most of the brunt,” — Lei Xing, independent auto analyst

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