BMW delivered 114,355 vehicles in China in Q3 2026, down 24.8% year-on-year. Mercedes-Benz managed only 86,800 units, a 31% plunge. Volkswagen Group fared worst of all, with 405,800 deliveries—a 38.5% collapse that accounted for more than 80% of its global quarterly decline.?
These are not blips.
They are the latest chapter in a multi-year retreat.
German brands’ collective sales in China have fallen roughly 25% since 2020, dropping to about 3.9 million vehicles in 2025. Their market share has slid from 26% in 2019 to 16% last year and is still falling. Volkswagen, once the country’s long-reigning No. 1 automaker, was overtaken by BYD in 2024 and pushed into third place by Geely in 2025. BMW and Mercedes have followed the same downward path, repeatedly posting double-digit China declines while Chinese competitors expand.
The reasons are structural. China’s car market has shifted hard toward electric vehicles and software-defined cars. Local brands now offer competitive—or superior—range, charging, connectivity, and features at lower prices. Young Chinese buyers increasingly view Volkswagen, BMW, and Mercedes as “brands for the parents,” solid on safety and quality but lagging in the tech and style that define modern status. Premium segments that once belonged to the Germans are being contested by Xiaomi, Nio, and others that treat vehicles as consumer electronics with wheels.
Price wars and a weaker overall market have intensified the pressure. Combustion-engine demand is fading, and the Germans remain more exposed to that segment than their Chinese rivals. Even as the three companies report growth in Europe and the United States and some progress with new electric models, China remains the dominant drag on group results. Porsche, part of the Volkswagen Group, has already prepared for a future in which China accounts for no more than 10% of its sales—down from nearly 35% at its 2020 peak.
For Germany’s auto industry, the implications are severe. China was long the profit engine and growth story that justified heavy investment and global scale. That engine is sputtering. The companies are cutting models, accelerating local electric development, and leaning harder on other regions, but the perception gap and technological lead of Chinese brands will not close quickly. The romance that once defined the world’s largest car market has cooled into something more transactional—and, for the German legacy makers, increasingly one-sided. The numbers from the latest quarter show the feeling is gone.