Slump in China sales leaves even German carmakers like Porsche reeling

Sports carmaker Porsche is the next German car brand to report a sharp decline in Chinese deliveries. It highlights the mounting challenges German luxury automakers face in the world’s largest car market.

In 2024, Porsche delivered 56,887 vehicles in China, a staggering 28 percent drop from the 79,283 units sold in 2023. This marks the brand’s third consecutive year of declining sales in the region.

Once Porsche’s largest single market, China is now the only region where the brand is seeing falling deliveries, dragging down its global sales by 3 percent to 310,718 units. Other markets, including North America and Europe, reported modest gains, with North America leading Porsche’s sales at 86,541 units, up 1 percent year-on-year.

Fierce local competition

Porsche’s challenges in China are not isolated. German luxury brands like Audi, BMW, and Mercedes-Benz are also struggling to maintain their foothold as Chinese automakers such as BYD, Nio, and Hongqi continue to gain market share. These local brands produce vehicles with cutting-edge technology and luxurious interiors that rival their European counterparts, often at lower prices.

The shift in consumer preferences is evident. The Chinese auto market grew by 5.5 percent in 2024, but German automakers reported declining sales. Audi’s deliveries in China fell by 12 percent, while BMW saw a 13 percent drop, and Mercedes-Benz registered a 7 percent decrease.

Macan fails to compensate

Porsche attributes its decline to “challenging economic conditions” and intensified regional competition. The company is now reevaluating its presence in China, announcing plans to reduce its dealer network from 144 outlets to about 100 by 2027. Additionally, reports surfaced last month that Porsche intends to cut its workforce in China by 30 percent.

These cutbacks indicate that Porsche views its struggles in China as more than just a temporary setback. The brand’s electric vehicle sales, which were once a bright spot, have also faltered.

In 2024, global sales of its Taycan EV dropped by 50 percent to 20,836 units despite a deep-running facelift last year. Also, while the new electric Macan SUV launched in September, it failed to offset the decline in Taycan sales, leading to a 6 percent decrease in Porsche’s total EV deliveries.

Local brands know where it’s at

One explanation is that local Chinese automakers demonstrate a better understanding of domestic consumer preferences, a factor German brands have struggled to address. European manufacturers have focused too firmly—as they traditionally did—on universal design and features.

Chinese brands have been quicker in integrating features tailored to local tastes, such as advanced infotainment systems and expansive rear-seat comfort. Audi, which was eclipsed by Tesla in total sales last year, has already addressed this handicap by launching its much-debated but dedicated AUDI brand for China. It ditched the logo with the famous four rings to cut ties with its legacy name partly.

Moreover, local brands leverage greater flexibility to align with China’s electrification drive, presenting a broader spectrum of EVs at varying price points. The golden era, when China served as a lucrative bonanza for foreign automakers, appears to be over.