German Handelsblatt: VW, BMW, Mercedes: German car manufacturers slide to 13-year low in China – VW only number three012198

Volkswagen, BMW, Mercedes-Benz: Under high pressure. Photo: PR (3), Getty Images

Dusseldorf. The crisis facing German car manufacturers in China is getting worse. In 2025, Volkswagen, Mercedes-Benz and BMW delivered fewer vehicles in the People’s Republic than in 13 years.

Between January and December, the three companies together sold less than 3.9 million vehicles – a significant decline compared to the previous year, as a Handelsblatt analysis of the companies’ sales figures shows. VW is now only in third place in the competition in the People’s Republic – behind its local competitors BYD and Geely.

But Mercedes lost the most in China: sales fell by 19 percent last year. BMW sold an eighth fewer cars in the Asian country in 2025. The VW Group’s loss was eight percent across all powertrains.

China’s weakness also depressed delivery figures for BMW, Mercedes and VW worldwide. Together, all three companies lost a little more than 1.5 percent. For the first time since the corona pandemic, the VW Group delivered fewer than nine million cars.

For German car manufacturers, 2024 was already one of the weakest years in China in recent decades. With the new figures, companies are once again under pressure – in a market that has long been considered their most important growth driver.

China: German car manufacturers are losing market share for electric cars

In the People’s Republic there is a ruinous price war for electric cars, and at the same time combustion engines are losing popularity. “German manufacturers are no longer relevant for most Chinese car buyers today,” says Thomas Luk, automotive consultant based in China and Germany. “At most, older buyers who know the brand names from earlier years are still above the perception threshold.”

The Germans are still having a hard time, especially electrically, in the world’s largest automobile market. With the exception of VW, the car companies currently do not provide figures for the sale of electric vehicles at regional level. However, Handelsblatt evaluations of figures from market researcher Marklines show that all German manufacturers in the electrical segment have lost significantly. In China, this will have increased by around a quarter overall in 2025.

In 2025, the VW Group said it lost 44 percent of its all-electric deliveries in China across all brands and had just over 115,000 electric sales.
According to Marklines, e-sales for the VW core brand alone in the country fell to around 79,000 units in the first eleven months of 2025, a decline of more than 50 percent. Even Toyota is selling more electric cars in the People’s Republic.
BMW lost around 46 percent in e-sales in China by the end of November compared to 2024. The group only sold just under 50,000 electric vehicles.
The decline at Mercedes was similar: The Swabians sold just under 11,000 electric cars in China in the first eleven months – 47 percent less than in the already weak previous year.

BYD had already replaced the VW brand as market leader in China in 2023, and since then the German market shares in the Asian country have continued to decline. In 2024, BYD overtook the core brand VW and the entire VW Group. In 2025, Geely also ranked ahead of Wolfsburg.

Together, Volkswagen’s two joint ventures with the state-owned companies FAW and Saic only have a market share of 10.9 percent, which is 1.3 percentage points less than in the previous year, according to data from the CPCA industry association on Monday.

Geely achieved eleven percent market share, which corresponds to an increase of 3.3 percentage points. BYD is at the top with 14.7 percent market share – after 16.2 percent in 2024.

Backlog in software

The majority of Chinese new car buyers today are between 30 and 40 years old – a target group in which software, assistance systems and digital ecosystems influence the purchasing decision more than classic brand traditions. This is precisely where German brands have recently been unable to keep up with local competitors.

Road traffic in Changchun, China: Ruinous price war. Photo: picture alliance / ZUMAPRESS.com

Technologically, VW, BMW and Mercedes are one and a half to two years behind the Chinese competition with their assistance systems and software, says expert Luk. “You can’t just make up for this gap – not even with partnerships.”

Nevertheless, all three German car companies rely on cooperation with local technology providers. BMW and Mercedes have formed alliances with the Chinese provider Momenta for automated driving. In addition to the established joint ventures with FAW and Saic, Volkswagen also cooperates with the electric car manufacturer Xpeng, among others.

The collaboration is expected to produce the first models developed specifically for China from 2026. Within the company, they are seen as a beacon of hope for catching up again in software and assistance systems. Nevertheless: This year, the VW Group is expected to generate less than one billion euros from its joint ventures in China for the first time in decades – after four to five billion euros in peak years.

BMW wants to make up for lost ground with the “New Class”, Mercedes is pinning its hopes on the new electric SUV model GLC and the revised S-Class, which will be presented at the end of January.

Pressure in China is likely to increase even further in 2026

In German car manufacturer circles, however, it is not expected that they will be able to match previous sales figures in the future. “2026 is likely to be a year of disillusionment for German manufacturers in China,” says expert Luk. Analysts at the major Swiss bank UBS expect a slight decline in the Chinese car market in 2026.

This is also because the Chinese government has halved tax breaks for electric cars. The local authorities intend to curb the price war. More than 100 car brands are vying for customers, and hardly any suppliers make money in China.

VW production in China: “2026 is likely to be a year of disillusionment for German manufacturers in China.” Photo: AFP

Frank Schwope, automotive expert at the Cologne University of Applied Sciences, expects consolidation to accelerate further in 2026. The market is overstocked and margin pressure will remain high in the short term. Volkswagen had already closed its Nanjing factory in 2025 for economic reasons – a first-of-its-kind step.

New regulations could put additional pressure on German premium providers. Since the beginning of the year, binding maximum limits for the energy consumption of electric cars have been in effect for the first time. Models that do not meet the requirements lose tax breaks – a disadvantage especially for larger and heavier vehicles from foreign manufacturers. In German industrial circles, however, the issue is seen as “quite relaxed,” they say.

BMW, Mercedes and VW are also under pressure in the USA

Because of China’s weakness, global sales for the three car manufacturers are at a three-year low. Together, BMW, Mercedes and the VW Group only sold 13.2 million vehicles. “The sales figures of German manufacturers are quite respectable considering the many headwinds that the industry has had to cope with,” says car expert Schwope.

However, the decline in sales of nine percent was particularly noticeable at Mercedes. The Swabians only delivered 1.8 million cars to dealers worldwide. Mercedes is the only German car company that has suffered losses in all important global markets – China, Europe and the USA. Sales at Volkswagen fell by 0.5 percent overall, and at BMW they rose slightly.

In the USA, manufacturers are hit by President Donald Trump’s tariff policy: Mercedes delivered twelve percent fewer cars there, while Volkswagen delivered ten percent fewer cars in North America. BMW is the only German company to have been able to increase its US sales. The increase of five percent is also explained by the fact that BMW produces around half of the vehicles sold in the USA locally.

Things are doing significantly better in the European home market: VW sold 3.38 million vehicles in Europe, four percent more than in the previous year. BMW increased its sales by seven percent. Sales at Mercedes were just below the previous year’s figure.

In Europe, car manufacturers also sell significantly more electric vehicles than the global average. But the numbers also show that this cannot cushion the weakness in China.