German Automakers Struggle to Reverse China Slump

BMW, Mercedes, and Audi are facing significant challenges in China, where their efforts to win over young buyers have failed to gain traction. Mercedes' recent "So McBenz" campaign with McDonald's, which replaced its iconic star with a cheeseburger figurine on the electric CLA, did not resonate.

In the first half of the year, Mercedes sold only 1,153 CLAs in China, while Xiaomi sold over 80,000 of its similarly priced SU7. BMW, Volkswagen, and Porsche also saw second-quarter sales declines of at least 30%, worse than the overall market drop.

German automakers have partnered with Chinese companies, built long-wheelbase models, and added AI-powered software, but they still struggle. Mercedes conceded that competing in China would require further price cuts, leading to losses on nearly every electric CLA sold. BMW slashed its margin outlook and is expected to be the least profitable major European automaker this year.

The EV market in China moves at a faster pace, with brands refreshing models every 18 months, while German companies still follow longer development cycles.

This shift has changed brand perception, with Mercedes, Audi, and BMW losing their luxury edge as they are seen as trailing local rivals on software and EV tech. Volkswagen's CEO said in June that the company's business model was essentially broken, leading to plans to cut 100,000 jobs and close German factories.

5 billion on its Neue Klasse models, set to launch in China soon, but success is uncertain. The market appears to favor cars built specifically for Chinese buyers over global models sold there.