The German luxury manufacturers BMW and Mercedes reported lower third-quarter sales due to weak demand and fierce competition in China. The German auto industry is dealing with a number of issues, such as high production costs, navigating the switch to electric vehicles, declining demand, and escalating Chinese competition.
Most recently, Volkswagen, the largest carmaker in Europe, has been considering closing its plants in Germany for the first time as a cost-cutting measure. BMW’s sales decreased by 13% for the July–September quarter, while Mercedes’ sales decreased by 3%.
A faltering economy has impacted demand in China, the largest auto market in the world, and local automakers are posing a serious threat to international automakers with their lower-priced models, particularly electric vehicles.
Mercedes’ sales in China dropped by 13%, while BMW’s decreased by a third.
Mercedes also reported a 31% decline in BEV sales, indicating a muted global demand for these vehicles. BMW’s BEV sales increased by 10% throughout the quarter.
The European Union has lately levied high tariffs on electric vehicles (EVs) manufactured in China, citing their improper receipt of state subsidies. German automakers, who generate nearly a third of their revenues in China, have expressed alarm and asked for further negotiations, but Beijing disputes this and has warned reprisal.