German luxury automakers are experiencing significant challenges in China, with Porsche, Mercedes-Benz, and BMW reporting double-digit sales declines in the first quarter of 2025. Porsche has been hit the hardest, with deliveries plummeting 42 percent to 9,471 cars during the January-March period compared to the same time last year. The company attributes this decline to “the continuing tense economic situation in the Chinese market and its focus on value-oriented sales.”
Mercedes-Benz also saw a significant drop, with shipments to Chinese customers decreasing 10 percent to 152,800 vehicles in Q1 2025. Despite this, the brand remained the best-selling luxury car brand for vehicles priced over $136,000. Mercedes is hoping the launch of its new CLA model in the second half of the year will help improve sales. The brand has also been catering to local preferences by offering longer wheelbase versions of its A-Class, C-Class, and E-Class sedans.
BMW Group’s deliveries, including both BMW and Mini brands, decreased 17.2 percent to 155,195 cars in the first quarter of 2025. Like Mercedes, BMW has been offering stretched sedans and long-wheelbase SUVs to appeal to Chinese buyers who prefer more rear legroom. The company even sells a fully electric sedan based on the elongated 3 Series, manufactured at one of its Chinese factories.
The struggles of these luxury brands are attributed to increased competition from domestic Chinese automakers, who have caught up in terms of design and technology while offering more competitive pricing. Chinese brands have an advantage in production costs due to access to raw battery materials and lower labor costs, making it challenging for Western automakers to keep up.
In response, legacy brands are taking various measures, including the launch of sub-brands and job cuts. Mercedes, Porsche, and Audi have all announced significant layoffs as they try to position themselves for the future in a rapidly changing automotive landscape.
