Competition intensifies and continued weakness in the Chinese market are further hitting foreign car manufacturers. On Thursday and Friday, Mercedes-Benz, BMW, Volkswagen, and its subsidiary brand Porsche all issued sales or profit warnings.
The softness in the Chinese market has dealt the most serious blow to the German automotive industry. On Thursday, both Mercedes-Benz and BMW issued profit warnings, with the quarterly sales in China for these two luxury car brands seeing a significant decline.
BMW and Mini saw the largest drop in sales in over four years, down 30% year-on-year in China in the third quarter. Due to weak demand for high-priced models like the S-Class and Maybach, Mercedes’ delivery volume in China decreased by 13%.
According to data from the China Passenger Car Association, the share of electric vehicles and plug-in hybrid vehicles in car sales in China has exceeded 50%. The Chinese government’s incentives for the sales of electric vehicles have boosted domestic car manufacturers, and recent economic stimulus measures have sparked new demand.
Furthermore, the long-term real estate crisis in China and consumers’ cautious approach towards spending on high-end goods have led to a cold reception for German luxury cars. Volkswagen, BMW, and Mercedes have long dominated the sales of high-end gasoline-powered cars in China, but now lag behind domestic manufacturers like BYD.
On Friday, the Volkswagen Group stated that their market share continued to decline in key markets, with sales in China dropping by 15% in the third quarter.
Intensified competition and subdued consumer spending in the Chinese market have resulted in Porsche, a luxury sports car brand under Volkswagen, seeing its lowest sales volume in a decade in the third quarter.
Porsche announced on Friday that their sales in China had dropped by 29% in the first nine months of the year. Among their models, the large-engine Panamera and electric sedan Taycan saw the largest declines, dropping by 20% and 50% respectively, especially in the Chinese market.
Marco Schubert, head of sales at Volkswagen, said, “The competitive situation in China is particularly fierce, which is the main reason for the decline in our global deliveries.”
Volkswagen’s stock fell by 1.6% on Friday, leading to a decline of over 17% in their stock price this year. Porsche’s stock rose by 2%, with a decrease of around 12% since the beginning of the year.
The slowdown in the Chinese economy has prompted Porsche to reassess its strategy. In the face of the rapid shift towards electric cars and the economic slowdown, Porsche CEO Oliver Blume has begun to push Porsche’s sales in China towards other markets. He also mentioned that Volkswagen will abandon its previous set electrification targets: while electric vehicles may account for over 80% of Porsche’s new car sales by 2030, it is no longer a specific goal for the company.
Volkswagen, Europe’s largest car manufacturer, is undergoing significant reforms due to softening demand in Europe, competition from China, challenges brought by vehicle electrification, and Germany’s high costs. The company is considering closing German factories for the first time.