China, December 14, 2025
A significant downturn in China’s high-end car market is adversely affecting European automakers like Mercedes-Benz, BMW, and Porsche. Premium car sales have dropped from approximately 15% to 13%, driven by an economic slowdown and a shift in consumer preferences towards more affordable domestic brands. European luxury carmakers are facing substantial sales declines as domestic competitors, particularly BYD, rise in market share. Dealerships are struggling with unsold inventory and price drops, prompting regulatory measures aimed at addressing unfair practices in the automotive sector.
High-End Car Sales Decline in China Impact European Automakers
HONG KONG — Recent data indicates a significant downturn in China’s high-end car market, adversely affecting European automakers such as Mercedes-Benz, BMW, Porsche, and Aston Martin. This trend is attributed to a combination of economic slowdown and shifting consumer preferences.
Declining Sales and Market Share
The share of premium car sales in China has decreased from approximately 15% in 2023 to 13% in the first nine months of 2025. This decline is largely due to reduced demand for foreign luxury vehicles, as Chinese consumers increasingly favor more affordable domestic brands.
Impact on European Automakers
European luxury carmakers are experiencing notable sales declines in China. For instance, Mercedes-Benz reported a 27% drop in sales during the July-September quarter compared to the previous year. Similarly, BMW’s sales, including its subsidiary brand Mini, fell by 11.2% year-on-year in the first nine months of 2025. Porsche and Aston Martin have also cited weaker demand in the Chinese market.
Rise of Domestic Competitors
Chinese automakers, particularly BYD, are gaining market share by offering technologically advanced electric vehicles (EVs) and hybrids at competitive prices. BYD has overtaken Volkswagen as the top car seller in China and now leads the new energy vehicle segment. Chinese brands now account for nearly 70% of passenger vehicle sales, while German, Japanese, and American brands lag behind.
Market Dynamics and Consumer Behavior
The economic slowdown in China has dampened consumer appetite for major purchases, with many opting for more affordable vehicles. Government incentives for electric and hybrid vehicles have further steered buyers toward domestic models. Additionally, a prolonged property downturn has reduced the desire among the wealthy to display their affluence through luxury car purchases.
Challenges for Dealerships
The decline in luxury car demand is also impacting dealerships, with used luxury cars experiencing significant price drops. Dealerships across China are struggling to sell high-end vehicles, leading to increased discounts over the past two years. Analysts anticipate that competition from Chinese automakers will continue to pressure foreign brands in the world’s largest car market.
Regulatory Environment
In response to the competitive landscape, China’s market regulator has introduced draft regulations aimed at curbing unfair pricing practices among automakers and dealers. These proposed rules target practices such as selling vehicles below cost using discounts or incentives and unjustified price hikes by component manufacturers during supply chain disruptions. The regulations aim to increase price transparency, stabilize supply chains, and protect consumers’ long-term interests.
Conclusion
The slowdown in China’s high-end car market presents significant challenges for European automakers, who must adapt to changing consumer preferences and increased competition from domestic manufacturers. The evolving economic and regulatory environment will continue to shape the automotive landscape in China.
Frequently Asked Questions (FAQ)
What is causing the decline in high-end car sales in China?
The decline is primarily due to China’s economic slowdown and changing consumer preferences, with buyers increasingly favoring more affordable domestic brands over foreign luxury vehicles.
Which European automakers are most affected by this trend?
European luxury carmakers such as Mercedes-Benz, BMW, Porsche, and Aston Martin are experiencing notable sales declines in China.
How are Chinese automakers responding to the market changes?
Chinese automakers, particularly BYD, are gaining market share by offering technologically advanced electric vehicles and hybrids at competitive prices, leading the new energy vehicle segment.
What impact is this decline having on car dealerships in China?
The downturn in luxury car demand is impacting dealerships, with used luxury cars experiencing significant price drops and increased discounts over the past two years.
What regulatory measures are being considered in response to the market situation?
China’s market regulator has introduced draft regulations aimed at curbing unfair pricing practices among automakers and dealers, targeting practices such as selling vehicles below cost and unjustified price hikes during supply chain disruptions.
Key Features of the High-End Car Sales Decline in China
| Feature | Details |
|---|---|
| Decline in Premium Car Sales | Share fell from 15% in 2023 to 13% in the first nine months of 2025. |
| Impact on European Automakers | Mercedes-Benz, BMW, Porsche, and Aston Martin reported significant sales declines in China. |
| Rise of Domestic Competitors | Chinese brands, especially BYD, now account for nearly 70% of passenger vehicle sales. |
| Consumer Behavior | Government incentives and economic factors have led consumers to prefer more affordable domestic models. |
| Dealership Challenges | Dealerships face difficulties with unsold high-end vehicles and declining used car prices. |
| Regulatory Measures | China’s market regulator is considering draft regulations to curb unfair pricing practices among automakers and dealers. |
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