BMW Fares Well with Customs Clearance, Mercedes Faces Challenge with Smaller Bread Production
In the competitive landscape of China's automobile industry, Volkswagen has emerged as the frontrunner, currently holding the largest market share. The German automaker ranks third, with a slight growth of 0.6% in H1 2025.
Behind Volkswagen, German brands BMW and Mercedes-Benz are facing a challenging market. BMW ranks ninth, experiencing a significant decline of 15.5% in market share, while Mercedes-Benz follows closely in tenth place, with a decline of 12.8%.
These figures reflect a broader trend, as foreign brand market share in China has dropped steeply from 62% in 2020 to just 36% in 2025. German brands have seen their market share decline from 24% to 15% due to intense competition from Chinese electric vehicle makers.
Among the Chinese competitors, innovative startups like Nio, Xpeng, Xiaomi, and others are making significant inroads, eroding market share from German manufacturers in China.
Despite the challenges, Volkswagen's position remains stronger relative to its German peers. The company is set to introduce new models such as the ID.AURA and ID.ERO, along with Chinese partners Xpeng and Horizon Robotics.
BMW, too, is not resting on its laurels. The company aims to compete with innovative startups like BYD, Nio, Xpeng, and others with the New Class.
Mercedes is also making moves to regain its footing, introducing the CLA. However, the company reported a 14% decrease in car sales in China in H1 2025, with a reported 30% sales collapse in Q2.
The importance of the Chinese market for German manufacturers cannot be overstated. According to auto expert Ferdinand Dudenhoeffer from the Center Automotive Research, the significance for German manufacturers lies in halting the decline in the Chinese market.
In contrast, the market environment in China remains challenging for German automakers. The focus is on range extenders, set to arrive in 2026 for various automakers. The concessions made by BMW, Mercedes-Benz, Porsche, and Volkswagen in the first half of the year due to US trade policies further underscore the difficulties faced by these companies.
In terms of global car sales, approximately 24 million cars will be sold in China this year, compared to around 16 million cars in the US. Less than 11 million cars will be sold in the EU this year.
As the Chinese automobile market continues to evolve, it will be interesting to see how German manufacturers adapt and compete in this dynamic landscape.
- The Chinese market's significance for German automakers, such as BMW and Mercedes-Benz, is increasingly vital as they strive to halt their declining market share, with technology innovations, like range extenders, set to arrive in 2026.
- As foreign brand market share in China decreases, Chinese competitors like Nio, Xpeng, Xiaomi, and others are aggressively taking over, forcing German brands like BMW and Mercedes-Benz to reformulate their strategies to compete effectively.
- In the midst of intense competition from Chinese electric vehicle makers, Volkswagen, with its strategic partnerships with Chinese firms like Xpeng and Horizon Robotics, is introducing new models to maintain its leading position in China's automotive industry, despite experiencing less growth than in previous years.
