BEIJING — Germany's long-held dominance in China's auto market is crumbling. Flagship models from the country's big three automakers — BMW, Mercedes-Benz and Audi — all sold fewer than 10,000 units in China last month, as Chinese electric-vehicle makers push into the premium segment with advanced technology and lower prices.
Not a single major sedan or sport utility vehicle from the three German brands topped 10,000 units in Chinese retail sales in September, according to local media reports on the 20th. The BMW 3 Series and 5 Series, the Mercedes-Benz C-Class and E-Class, the Audi A6L and SUVs including the BMW X3, Mercedes-Benz GLC and Audi Q5L all fell short of that mark. Even the best-selling model, the BMW 3 Series, managed only 9,975 units.
Third-quarter results told the same story. BMW sold 114,000 vehicles in China in the third quarter, down 24.8% from a year earlier. Mercedes-Benz sales tumbled 31% to 87,000 units, while Audi sold about 94,600 vehicles, a 24.5% decline. Porsche's China sales shrank 35.8% to 6,992 units. Over the same period, Chinese EV maker Nio outsold all three German brands.
Price cuts have failed to turn the tide. The BMW 5 Series, Mercedes-Benz E-Class and Audi A6L, which once started above 400,000 yuan (about 80 million won), now sell in the 300,000-yuan range. The BMW 3 Series and Mercedes-Benz C-Class have dropped into the 200,000-yuan range. Average discounts at the three German automakers in China reached 23% to 28% in the first half of this year, yet their sales still fell 20% to 27%.
Analysts say Chinese domestic brands are rapidly expanding their share of the premium market, leaving German automakers with less room to compete. Sales of passenger cars priced above 400,000 yuan totaled 430,000 units in the first half, up 1% from a year earlier, according to the China Passenger Car Association. Within that segment, sales of new energy vehicles, including EVs, surged 46% to 240,000 units, while internal combustion models dropped 27% to 190,000 units. The NEV penetration rate in the segment climbed to 56% from 44% a year earlier. Chinese homegrown brands lifted their share of that price bracket to 59%, up 21 percentage points, while traditional luxury brands slipped to 38%. The combined share of the three German brands in China's luxury car market, which approached 70% in 2018, has fallen below 40% this year.
Industry watchers say Chinese consumers are shifting the criteria they use to choose a luxury car, moving away from brand prestige toward advanced technology and user experience. Buyers who once shopped for BMW, Mercedes-Benz and Audi are now turning to Chinese premium EV brands such as Li Auto, Nio and Huawei.
The three German automakers are accelerating localization in China and their shift to electric vehicles in search of a way forward. BMW introduced the iX3, a new electric SUV developed exclusively for China, priced from 269,900 to 339,900 yuan. Mercedes-Benz's electric GLC and the Audi E7X, developed with SAIC Motor, are also priced in the 200,000- to 300,000-yuan range. At the same time, the automakers are expanding local research and development and parts sourcing while deepening technology partnerships with Chinese companies.
"The price benchmark in China's luxury car market has fundamentally changed," an industry official in China said. "German automakers can still compete on driving range, charging performance and the driving experience, but it has become difficult to command high prices on brand prestige alone, as they once did."