German Handelsblatt: Auto industry: Audi against BMW and Mercedes: Who will win the three-way battle of the premium brands?012202

Car bosses Ola Källenius, Gernot Döllner and Oliver Zipse (from left): For experts, a brand has “disappeared into obscurity”. Photo: Dpa, Reuters, PR, brckmnn [M]

Dusseldorf. BMW, Mercedes and Audi are still the largest premium brands in the world. But will they stay that way? All three German manufacturers are under pressure and have lost sales.

However, BMW has remained comparatively stable. In 2025, the Munich-based company delivered almost 2.2 million vehicles from its core brand to customers. That’s 1.4 percent less than a year ago, but things are looking significantly worse for direct competitors.

At arch-rival Mercedes, sales fell by nine percent. The Swabians only handed over 1.8 million cars to dealers – fewer than at any time since 2014. At Audi, sales fell by three percent to 1.6 million vehicles, as the Ingolstadt-based company announced on Wednesday.

Handelsblatt worked with industry experts to analyze who has the best future prospects based on strategy, financial indicators and sales figures.

There is currently a clear winner in the three-way battle: “BMW is currently in the best position of the three,” says Stefan Bratzel, head of the Center of Automotive Management in Bergisch Gladbach. Other experts agree with him – and see Mercedes in second place, while Audi follows at a distance in third place.

Overall, the entire trio is in danger of being left behind globally. It is particularly affected by the market weakness in China, US tariffs and consumer restraint in Europe. In addition, domestic car manufacturers are having a much more difficult time making the transition to electromobility and developing software than their competitors from China.

Manufacturers only achieve margins of between two and six percent with their cars. That is well below your own ambitions. Even manufacturers like Suzuki, Toyota or Kia achieve double-digit values - although they rely on volume models that usually bring lower returns.

1) BMW benefits from consistent strategy

BMW benefits from having pursued a more consistent strategy than its competitors. Despite public criticism, BMW boss Oliver Zipse did not want to commit to a rigid electric target years ago, but instead stuck to all types of drive and a uniform design for electric cars and combustion engines.

“BMW management made the right decision by being open to technology and perhaps also had the necessary bit of luck,” says Horst Schneider, an analyst at Bank of America. At BMW, including the Mini brand, 18 percent of the cars sold are pure electric vehicles – significantly more than at Mercedes with a share of just over nine percent.

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BMW, on the other hand, did not have to convert any plants or models and could concentrate on the development of the future “Neue Klasse” generation. “BMW will have exceeded the peak in investments in 2024,” says analyst Patrick Hummel from UBS.

In fact, at 5.9 billion euros, the Munich-based company had to spend almost eleven percent less on research and development services in the first nine months of 2025 than a year ago. At Mercedes, spending on cars and vans was only slightly below the previous year’s level at 7.3 billion euros.

Audi is still struggling with the consequences of the diesel scandal. The brand never really recovered from the million-fold manipulation of its diesel engines due to fines, damage to its image and slumping sales. The gap to its competitors BMW and Mercedes is growing.

2) Model offensive at BMW and Mercedes – delays at Audi

At Audi, the problems in software development are taking their toll. Important electric and combustion engine models such as the A5, the Q6 e-tron and the A6 e-tron were therefore launched up to three years later than planned. The models, which are already considered outdated, now have to assert themselves against the new developments from Mercedes and BMW, which have better charging performance and software. The discount pressure on Audi is therefore likely to grow.

BMW is relying on the architecture of the “Neue Klasse” electric platform for its new vehicles. The modular system enables economies of scale when purchasing central components. At Mercedes, the architecture is more complex: Mercedes produces smaller models like the CLA on the MMA platform, which is designed for hybrids and electric vehicles. Mid-range cars like the GLC are built on the purely electric MB.EA platform.

Mercedes GLC: Part of the unprecedented model offensive. Photo: Bloomberg

For industry observers, BMW is presenting the strongest overall package with the new iX3 electric SUV. The range and charging speed are slightly higher than Mercedes, and the starting price is lower. The Swabians’ interior appears more valuable. “Both car manufacturers will serve their clientele well with their new vehicles,” says UBS expert Hummel.

BMW iX3: The best overall package for industry experts. Photo: Bloomberg

BMW will bring the revised version of the 7 Series onto the market in the second half of the year. The current generation has been running for a good three years. At Audi, however, a new A8 is a long time coming. Because the Ingolstadt-based company is not planning a large luxury sedan on the current PPE electric platform. However, the VW Group’s upcoming standard SSP platform will not come until the end of the decade.

Car expert Bratzel says: “Audi has disappeared into obscurity. But things can get better again as management is increasingly addressing the issue of innovation.”

3) Electric sales in China: Mercedes is suffering particularly sharp losses

Just a few years ago, the trio sold significantly more in China – and made record profits. “German premium manufacturers are particularly affected by the market weakness in China because they are estimated to generate more than a third of their group profits there,” says UBS expert Hummel.

Audi, BMW and Mercedes are falling behind, particularly when it comes to electromobility. While electric registrations in China rose by around 27 percent overall in the first eleven months, Mercedes sales fell by 47 percent. At BMW it fell by 46 percent. This is shown by figures from data provider Marklines based on insurance registrations.

According to their own statements, the Swabians would rather give up market share for electric vehicles in China than sell the vehicles at excessive discounts. According to experts, competitor BMW in particular benefits from this, as it offers greater discounts.

Although Audi also lost significantly in China, it was able to increase electric sales in other regions. Overall, almost 14 percent of Audi vehicles sold are purely electric vehicles. This means that the Ingolstadt-based company is moving up to BMW.

At Audi, electric sales were driven by the new A6 e-tron and the Q6 e-tron SUV, which came onto the market in mid-2024. “It will be exciting to see how these models will perform compared to the new electric vehicles from BMW and Mercedes in 2026,” says analyst Schneider.

Mercedes wants to increase sales figures with the electric version of its top-selling C-Class. This will be presented in the spring. BMW then also wants to present the 3 Series of the New Class. Audi is behind here too: the Ingolstadt-based company won’t be able to follow suit with an electric mid-range model until 2028 at the earliest.

4) Audi is pursuing its own China strategy

Audi is pursuing a different strategy in China than its two competitors. The Ingolstadt-based company has brought the E5 Sportback electric vehicle onto the market under a sub-brand with its Chinese rival Saic. Audi appears without its brand emblem with the four rings and instead relies on lettering. Shortly after its market launch, the vehicle became Audi’s most successful electric car in China and was one of the best-selling electric models from German manufacturers during the communist dictatorship.

Audi E5 Sportback: Forgoing the traditional rings. Photo: Audi AG

Audi and Saic developed the car at record speed, but almost all of the technology comes from Saic. UBS analyst Hummel says: “For Audi, this tactic runs the risk of diluting the brand because there is hardly any distinguishing feature from other Chinese car manufacturers.” In addition, there are no synergies with other Audi plants.

5) Staff cuts impact profits at Audi and Mercedes

All three carmakers are struggling with historically low profits. This fell particularly sharply at Mercedes. In the first nine months of 2025, the Swabians had less than three billion euros before interest and taxes (EBIT) in the passenger car business – a decrease of 54 percent compared to the same period last year.

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Profits for the Audi core brand have fallen below the one billion euro mark. At 1.8 percent, the margin is well below that of the two competitors – and even below that of its in-house rival Volkswagen.

At Audi, the decline in profits is partly explained by the restructuring of the group: the manufacturer wants to cut 7,500 jobs in Germany by 2029, and the provisions are putting a strain on the balance sheet. Audi should have cost advantages over BMW and Mercedes, since the Ingolstadt-based company can rely on the parent company for components and development services.

BMW does not yet plan to reduce its workforce on a large scale. The group generated more than five billion euros in profit in its passenger car division – and thus overtook Mercedes. Even if the segment is as unprofitable as it was in the Corona year 2020: the margin of 5.9 percent is almost two percentage points above the value that the Swabians achieved. In the current situation, that’s worlds apart.

6) US tariffs hit Audi the hardest

Audi has a structural disadvantage, primarily because of US tariffs. The manufacturer is most affected by trade policy because it does not have its own production in the USA and has to export vehicles from Europe. In 2025, the tariffs cost Audi 1.3 billion euros. US sales fell by 16 percent compared to the previous year.

Production at the BMW plant in Spartanburg: US tariffs are depressing car manufacturers’ margins. Photo: AP

Audi boss Döllner insists on having his own US production, but the financing for this is not yet in place. The costs are estimated in corporate circles at up to four billion euros. Because the parent company is on a cost-cutting path, investments are being reduced. According to VW boss Oliver Blume, a US factory for Audi would only be realistic if the US government subsidized it – but it doesn’t look like that so far, despite intensive negotiations.