Core Insights - The German luxury car brands "BBA" (Mercedes-Benz, BMW, Audi) reported significant profit declines in the first half of 2025, with Mercedes-Benz's net profit dropping by 55.8%, Audi's by 37.5%, and BMW's by 29% [2][3][4] - The brands are facing dual challenges from U.S. tariffs and declining sales in the Chinese market, exacerbated by fierce competition from local luxury brands and an overall price war in China [2][3][4] Financial Performance - Mercedes-Benz's revenue fell to €66.377 billion, down 8.6%, with net profit dropping from €6.087 billion to €2.688 billion [3] - BMW's sales revenue decreased to €67 billion, also down 8%, with a net profit of €4 billion, a 29% decline [3] - Audi's revenue increased by 5.3% to €32.57 billion, but net profit fell to €1.346 billion, a 37.5% drop [3] Impact of U.S. Tariffs - The U.S. government's 25% punitive tariffs on EU-imported cars have significantly impacted BBA's profits, with Audi reporting losses exceeding €600 million due to tariffs and transformation costs [3][4] - Mercedes-Benz estimated a loss of €362 million due to the tariffs, which affected its core automotive business profit margin [3][4] Sales Decline in China - BBA's sales in China have been declining, with Mercedes-Benz's sales down 14% to 293,200 units, Audi's down 10.2% to 287,600 units, and BMW's down 15.5% to 318,000 units [4][5] - The shift towards electric and smart vehicles in China has intensified competition, with local brands gaining market share [4][5] Electric Vehicle Sales - Mercedes-Benz's electric vehicle sales fell by 14% to 87,300 units, while Audi's in China dropped by 23.5% to 7,897 units [5] - BMW's electric vehicle sales increased by 18.5% to 318,900 units globally, but it still lacks competitive products in the Chinese market [5] Adjusted Performance Expectations - Both Mercedes-Benz and Audi have lowered their full-year performance expectations due to ongoing challenges, with Audi revising its revenue forecast down to €65-70 billion [5][6] - Mercedes-Benz anticipates a return on sales of 4%-6%, down from an initial forecast of 6%-8% [5][6] Strategic Responses - BBA is increasing local production in the U.S. to mitigate tariff impacts, with Audi planning a $4.6 billion investment in a new factory [6] - In China, BBA is focusing on deep localization of technology, products, and supply chains to strengthen its market position [6][7] Product Development and Partnerships - BBA is accelerating the launch of new products, especially electric vehicles, with BMW planning to introduce over 10 new models in China by 2025 [7] - Collaborations with local suppliers for smart technology are being prioritized, with BMW partnering with Huawei and Audi also collaborating with the tech giant [7][8] Market Outlook - The luxury car market is facing a new competitive landscape, with BBA needing to adapt to the challenges posed by local brands and changing consumer preferences [9] - The era of high double-digit growth for all brands is perceived to be over, necessitating strategic adjustments for sustained development [9]

Core Insights - Mercedes-Benz showcased its strategic layout in global and Chinese markets at the 2025 Shanghai International Auto Show, presenting a strong lineup of 28 models across its four brands [1] - In Q1 2025, Mercedes-Benz maintained its position as the luxury brand sales champion, particularly in the Chinese market, with significant sales growth in key models like the E-Class and GLCSUV [1] - The company is committed to increasing investment in the Chinese market, marking the 20th anniversary of its local production and R&D efforts [1] Group 1: Product Launches and Innovations - The Vision V concept car and the new pure electric long-wheelbase CLA made their global debuts, with the Vision V designed as a luxury MPV featuring a drag coefficient of 0.20 and advanced interior technology [2] - The new pure electric long-wheelbase CLA is the first domestically produced luxury electric sedan, boasting a CLTC range of 866 kilometers and an energy consumption of only 10.9 kWh per 100 kilometers [2] Group 2: Technological Advancements - Mercedes-Benz revealed its R&D focus for the next three years, including the application of steer-by-wire technology that enhances steering response speed by 30% [3] - The company announced an accelerated plan for solid-state battery production, which will improve energy density by 50% and extend cycle life to 1500 times [3] - The new CLA features an L3-level driver assistance system that achieves over 97% accuracy in recognizing complex local traffic scenarios [3] Group 3: Investment Plans - Mercedes-Benz plans to invest over 14 billion RMB in China for the mass production of three exclusive models, with the new CLA expected to launch within the year [4] - The Beijing Benz factory has begun production line upgrades to achieve an annual capacity of 100,000 units for the new CLA [4] - Future models include a long-wheelbase GLE SUV set for Q1 2026 and a luxury electric MPV based on the VAN.EA platform expected to launch in 2027 [4]