In early 2026, China’s luxury passenger car market reached a critical inflexion point as traditional European premium brands collectively adjusted pricing strategies amid continued sales erosion in the world’s largest auto market, according to the influential local website 36kr.
Data from the 2025 calendar year showed that cumulative China sales for BMW, Mercedes‑Benz, and Audi contracted significantly year‑on‑year. BMW’s China deliveries fell approximately 12.5 %, Mercedes‑Benz dropped around 19 %, and Audi’s sales declined about 5 % versus 2024 figures.
Combined, the three brands sold roughly 260,000 fewer vehicles in China in 2025, according to reports, contributing to a broader contraction in the luxury segment.
In recent years, China has accounted for a substantial share of the German trio’s global volume and profits, making it a key strategic region. The 2025 downturn reduced this leverage and shifted focus toward local market responsiveness.
Strategic pivot
In response to softer demand and intensifying competition from domestic premium EVs, BMW China revised recommended retail prices for more than 30 models, effective January 1, 2026.
Many vehicles saw cuts exceeding 10%, with select units reduced by more than 300,000 yuan (€36,000). The BMW iX1 eDrive25L’s price fell from 299,900 yuan (€35,990) to 228,000 yuan (€27,360).
Mercedes‑Benz followed in early February 2026, adjusting prices on core models, including the C‑Class and GLC, by roughly 33,000-69,000 yuan (€3,960-€8,280). Industry commentary frames these measures as dealer-support and competitiveness strategies rather than as an explicit ‘price war’.
Additional market signals emerged in January 2026 as Mercedes-Benz’s new all-electric CLA reportedly recorded no published retail sales data for two consecutive months following its November 2025 launch.
While industry sources indicated that terminal insurance registrations continued at modest levels, the absence of retail reporting has been interpreted by local media as reflecting inventory digestion, an order-based distribution strategy, and weak demand for compact EVs at its 249,000 yuan (about €30,000) starting price.
Very competitive market
Automotive media have interpreted these moves, particularly BMW’s deep and broad cuts, as a pivot from premium pricing toward greater value accessibility, aimed at addressing slowing sales and rising domestic competition.
Pricing adjustments are occurring amid accelerated adoption of NEVs (new electric vehicles) and the rise of Chinese premium brands capturing mid‑to‑high‑end segments with advanced connectivity and EV capabilities.
Legacy European brands have been slower to monetise these consumer priorities. Early 2026 passenger-car sales weakness across China further underscores the growing importance of pricing competitiveness for the German trio.
Decisive period
Externally, regulatory guidance aims to stabilise industry value creation and moderate discounting. For the German trio, 2026 is shaping up as a decisive period.
Success depends on balancing localised pricing, electrification, the integration of digital technology, and strategic repositioning. Outcomes in China are expected to influence global brand performance and market share trajectories.
