Germany’s top automakers are facing a deepening crisis in China, where sales fell sharply during the April through June period as the world’s largest car market continues a prolonged downturn that is squeezing established brands competing against homegrown rivals.
Volkswagen, Mercedes-Benz, and BMW each posted sales declines of at least 30% in China during the second quarter, based on figures released by the companies. Volkswagen suffered the worst drop of the three, with a year-over-year decline of 36.6%.
Volkswagen sales executive Marco Schubert acknowledged the difficult environment, saying, “The situation remains challenging in China, where we were unable to escape the overall market decline of around 20%, despite initial positive momentum from our newly launched, locally developed electric vehicles there.”
Volkswagen had previously been knocked from its position as the top-selling automaker in China by Chinese electric vehicle giant BYD in 2024. The German brand briefly reclaimed that top spot earlier this year after launching a push toward electric vehicles in the country, a rebound that was partly tied to expiring subsidies for greener cars in China.
Analysts and industry observers note that German automakers built their reputation in China on gasoline-powered vehicles, a legacy that no longer appeals to younger, tech-focused Chinese consumers.
BMW has also been feeling the strain. Last month, the company cut its 2026 financial outlook — its third China-related profit warning in fewer than three years. BMW also pointed to the ongoing conflict in the Middle East as a factor driving up fuel costs and dampening Chinese consumer interest in the combustion-engine vehicles the company still heavily depends on in that market.
All three German automakers are working to introduce new electric vehicle models designed specifically for Chinese tastes and preferences. However, industry experts say the effort may not be moving fast enough.
“They’re trying to play catch-up at a very rapid pace, whilst their competition is running at twice the speed,” said Paul Bennett, managing partner at advisory firm Madox Square.
Car sales across China declined for a ninth straight month in June, pushing automakers to look increasingly toward export markets, including Europe, to make up the difference.
Despite those efforts, Volkswagen, Mercedes-Benz, and BMW were unable to recover their China losses through sales in other regions. For the second quarter, the three companies posted global sales declines of 8.6%, 8%, and 4.9%, respectively.
