German automakers hit by sharp China sales drop in second quarter
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FILE PHOTO: Volkswagen's Jetta X concept on display at the Beijing International Automotive Exhibition (Auto China), in Beijing, China April 24, 2026. REUTERS/Tingshu Wang/File Photo
By Rachel More
BERLIN, July 10 (Reuters) - German carmakers' sales collapsed further in China during the second quarter, as a protracted slowdown in the world's biggest auto market cranked up the pressure on legacy brands in a bruising battle with local competitors.
Volkswagen, Mercedes-Benz and BMW all saw a drop of at least 30% in the April to June period in China, according to company sales data.
Volkswagen reported on Friday the steepest year-on-year decline, at 36.6%.
"The situation remains challenging in China, where we were unable to escape the overall market decline of around 20%, despite initial positive momentum from our newly launched, locally developed electric vehicles there," Volkswagen sales executive Marco Schubert said.
PINNING HOPES ON NEW PRODUCTS
Volkswagen was unseated by Chinese EV heavyweight BYD as the market's top-selling carmaker in 2024, but the German company briefly wrested back its crown at the start of the year as it embarked on an EV-heavy product offensive in the country.
This brief respite was attributed to fading subsidies for greener cars in China.
German brands built their success in China on combustion engine heritage, which analysts and industry observers say no longer resonates with young, tech-savvy Chinese consumers.
Last month, BMW slashed its 2026 guidance in its third China-related profit warning in less than three years.
It also said the Middle East war was driving up fuel prices and impacting Chinese consumer demand for the combustion engine models on which it still heavily relies in that market.
MODELS TAILORED TO THE REGION
Like Volkswagen, BMW and Mercedes are also updating their product offerings in China with electric vehicles that they say are more tailored to the region.
"They're trying to play catch-up at a very rapid pace, whilst their competition is running at twice the speed," said Paul Bennett, managing partner at advisory firm Madox Square.
Car sales in China fell for a ninth consecutive month in June, prompting automakers to increasingly turn to export markets including Europe.
Volkswagen, Mercedes and BMW were unable to offset their losses in China in other regions during the second quarter, recording global sales declines of 8.6%, 8% and 4.9%, respectively.
(Reporting by Rachel More; Editing by Jan Harvey)
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