In an interview about the recent challenges faced by major German luxury car manufacturers, Mercedes-Benz and BMW, it’s clear that the downturn in sales during the last quarter is heavily influenced by the changing consumer spending habits in their largest market, China. According to a report by Bloomberg, BMW experienced a 13% decline in global sales in the third quarter, with sales in China plummeting by a staggering 30%, marking their largest drop in over four years. Likewise, Mercedes-Benz saw a 13% drop in sales in China, with sluggish demand for high-end models like the S-Class and Maybach contributing to an overall sales decrease of 3% during the same period.
The struggles in the Chinese market are further compounded by a slowdown in electric vehicle sales growth across Europe, leading both BMW and Mercedes to issue profit warnings. Tensions in U.S.-China trade relations may also pose challenges for these leading manufacturers. Following the European Union’s decision to impose tariffs of up to 45% on electric vehicles manufactured in China, Beijing may retaliate by considering increased tariffs on higher displacement vehicles from Europe. Last year, exports of German vehicles with engines over 2.5 liters to China reached $1.2 billion.
Despite the overall decline in sales across all regions, BMW managed to find a silver lining with their electric vehicles. Models such as the i4 and iX1 saw a substantial sales increase of 10%, reaching 103,440 units in the third quarter, setting them apart from Mercedes-Benz, which faced a 31% drop in electric vehicle sales, totaling 42,500 units. However, Mercedes did see a 10% increase in plug-in hybrid sales, buoyed by strong demand in the U.S. market.
Mercedes-Benz’s push for electric vehicles has not gone as planned, particularly in Asian markets where the reception has been lukewarm. Younger drivers in China are increasingly gravitating toward domestic brands, attracted by their more advanced digital and entertainment features.
In related news, sources indicate that Stellantis CEO Carlos Tavares is preparing to present a management restructuring plan to the board this week, which could impact various sectors including finance, regional operations, and individual brands. During a two-day meeting, the board will likely also discuss Tavares’ future, as Stellantis Chairman John Elkann has reportedly begun searching for potential successors.
Stellantis has also issued a profit warning, and the bleak outlook has raised questions about its corporate governance. With Tavares’ contract set to expire in early 2026, he is aggressively pursuing cost-cutting measures in an effort to regain control after a series of setbacks. However, it remains uncertain whether the board will back Tavares’ restructuring plan, as their focus shifts to optimizing performance in the lucrative U.S. market.
