High-end car sales sink in China as its economy slows, taking a toll on European automakers

Core Insights - Chinese demand for foreign luxury cars is declining as consumers prefer more affordable domestic brands, which are often sold at significant discounts [1][2] - The prolonged downturn in the Chinese property market has reduced consumer appetite for large purchases, with affluent buyers becoming more discreet about displaying wealth [2] - A government trade-in subsidy of 20,000 yuan ($2,830) for electric and plug-in hybrid vehicles has influenced buyers to opt for cheaper, entry-level cars, predominantly from Chinese manufacturers [3] Market Trends - Slowing economic growth is a key factor contributing to the reduced demand for premium cars, which typically include brands like Mercedes-Benz and BMW [4] - The market share of premium car sales in China, priced above 300,000 yuan ($42,400), increased to about 15% of total sales from 2017 to 2023, but has since declined to 14% in 2024 and 13% in the first nine months of 2025 [4][5] Competitive Landscape - Chinese automakers, such as BYD, are becoming more competitive through technological innovation, frequently launching new electric and hybrid vehicles at lower prices, including in the premium segment [6][7] - The share of passenger car sales held by Chinese brands reached nearly 70% in the first 11 months of this year, while German brands accounted for 12%, Japanese brands around 10%, and U.S. brands nearly 6% [7] - BYD has surpassed Volkswagen as the largest car seller in China and is currently the top-selling brand for new energy vehicles, having reduced prices of its electric and plug-in hybrid models by up to 34%, thereby increasing competitive pressure on rivals [8]