San Antonio, TX, December 14, 2025
The luxury car market in China is experiencing a downturn that significantly affects European automakers like Mercedes-Benz, BMW, and Ferrari. Sales of premium cars have slumped due to an economic slowdown and changing consumer preferences, with many buyers opting for more affordable, Chinese-made vehicles. This trend is prompting notable shifts in the competitive landscape as Chinese manufacturers introduce competitive electric and hybrid options. European brands are now facing challenges to maintain their market presence amidst this evolution.
San Antonio, TX
Declining High-End Car Sales in China Impact European Automakers
China’s luxury car market is experiencing a significant downturn, adversely affecting European automakers such as Mercedes-Benz, BMW, Porsche, Aston Martin, and Ferrari. This decline is primarily due to a slowing economy and changing consumer preferences.
Decline in Premium Car Sales
The share of premium car sales in China, typically priced above 300,000 yuan (approximately $42,400), has decreased from about 15% in 2023 to 13% in the first nine months of 2025.
Impact on European Automakers
European luxury brands are facing notable sales declines in China. For instance, Mercedes-Benz’s sales in China fell by 27% year-on-year in the July-September quarter. BMW and its subsidiary brand Mini experienced an 11.2% year-on-year drop in the first nine months of 2025. Porsche and Aston Martin also reported weaker demand. Italian luxury carmaker Ferrari saw a 13% year-on-year drop in car shipments to mainland China, Hong Kong, and Taiwan in January-September, marking the only region where sales declined during that period.
Rise of Chinese Automakers
Chinese manufacturers, notably electric vehicle maker BYD, are becoming more competitive by introducing new electric vehicles and hybrids at lower prices, including in the premium segment. Their products are more competitive and more affordable even in the premium segment, leading to a gradual loss of momentum for foreign brands.
Used Luxury Car Market Affected
The downturn in interest in luxury vehicles is impacting dealerships. For example, a 2024 Porsche Panamera 2.9T with approximately 20,000 kilometers (12,400 miles) was priced at 950,000 yuan ($134,300), down from the previous owner’s purchase price of about 1.4 million yuan ($198,454).
Government Incentives and Consumer Behavior
Government incentives, such as a 20,000 yuan ($2,830) trade-in subsidy for purchasing electric and plug-in hybrid vehicles, have influenced consumer behavior. Many buyers are opting for more affordable, entry-level cars, which are predominantly Chinese-made.
Outlook for European Automakers
The competitive landscape in China’s luxury car market remains challenging for European automakers. Analysts anticipate that Chinese automakers will continue to exert strong competition, keeping foreign brands under pressure in the world’s largest car market.
Conclusion
The slowdown in China’s economy and the rise of competitive Chinese automakers are reshaping the luxury car market, posing significant challenges for European brands. European automakers will need to adapt to these changing dynamics to maintain their presence in the Chinese market.
FAQ
What is causing the decline in high-end car sales in China?
The decline is primarily due to a slowing economy and changing consumer preferences, with many buyers opting for more affordable, Chinese-made vehicles.
Which European automakers are affected by this decline?
European luxury brands such as Mercedes-Benz, BMW, Porsche, Aston Martin, and Ferrari are experiencing notable sales declines in China.
How are Chinese automakers responding to this market shift?
Chinese manufacturers, notably electric vehicle maker BYD, are becoming more competitive by introducing new electric vehicles and hybrids at lower prices, including in the premium segment.
What impact are government incentives having on consumer behavior?
Government incentives, such as a 20,000 yuan ($2,830) trade-in subsidy for purchasing electric and plug-in hybrid vehicles, have influenced consumer behavior, leading many buyers to opt for more affordable, Chinese-made cars.
What is the outlook for European automakers in the Chinese market?
The competitive landscape remains challenging for European automakers, with Chinese brands continuing to exert strong competition, keeping foreign brands under pressure in the world’s largest car market.
Key Features
| Feature | Details |
|---|---|
| Decline in Premium Car Sales | Share fell from 15% in 2023 to 13% in the first nine months of 2025. |
| Impact on European Automakers | Mercedes-Benz, BMW, Porsche, Aston Martin, and Ferrari reported sales declines in China. |
| Rise of Chinese Automakers | Chinese brands, notably BYD, are introducing competitive electric vehicles and hybrids at lower prices. |
| Used Luxury Car Market Affected | Prices for used luxury cars have dropped, impacting dealerships. |
| Government Incentives | Trade-in subsidies are encouraging consumers to purchase more affordable, Chinese-made vehicles. |
| Outlook for European Automakers | European brands face strong competition from Chinese automakers in the Chinese market. |
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