China’s luxury car market is seeing steep sales drops for BMW, Mercedes-Benz and Porsche despite deep discounts. Learn why and what’s next – read now!
Even aggressive price cuts haven’t rescued Europe’s high‑end carmakers in China. Recent data from AutoReport and CarNewsChina reveal that flagship models from BMW, Mercedes‑Benz and Porsche are still recording sharp sales declines across the country.
Deep Discounts Fail to Boost Sales
Manufacturers have slashed list prices by more than 10 % on dozens of key models – from BMW’s popular sedans and SUVs to Mercedes‑Benz’s C‑Class and GLC. Yet dealer floors remain quiet, and the hoped‑for sales surge has not materialised.
Dealers Squeeze Into the Red
The “price‑bleed” strategy is pushing dealer profitability to record lows. Statistics for the first half of 2025 show that over half of China’s car dealerships operated at a loss. The outlook for 2026 looks little better, with only about 30 % of outlets managing to break even.
Inventory pressure and cash‑flow constraints are forcing many dealers to offer unofficial discounts that dip below the manufacturers’ official guidance, eroding margins to below break‑even levels on each new vehicle delivered.
Showroom Exodus
By the end of 2025 and early 2026, a wave of luxury‑brand showrooms began shutting their doors, particularly in tier‑2 and tier‑3 cities where foot traffic and purchasing power are weaker. Some Porsche dealers have even closed entirely to cut operating costs.
Rise of Domestic NEVs
Compounding the problem is the rapid ascent of home‑grown new‑energy vehicle (NEV) brands. Companies such as BYD, NIO and Xiaomi are commandeering showroom space and attracting customers not only with lower prices but also with advanced software ecosystems and smart‑car features.
Chinese consumers are increasingly valuing practical utility and cutting‑edge technology over the traditional prestige associated with European marques.
Regulatory Response
The Chinese government has started to intervene, introducing legal measures aimed at curbing “below‑cost” pricing tactics. The goal is to protect the dealer ecosystem and maintain market stability.
Outlook for 2026
Looking ahead, large dealership groups are undertaking major restructurings. Strategies include downsizing showroom footprints, consolidating locations, and shifting toward multi‑brand retail models to reduce fixed costs.
While the challenges are formidable, the evolving landscape may prompt European luxury automakers to rethink pricing, digital engagement and after‑sales services to stay relevant in China’s fast‑changing market.