European luxury automakers are bleeding market share in China as consumers abandon six-figure German sedans for cheaper domestic brands led by BYD.

Why it matters: China’s premium segment has shrunk for the third straight year while Chinese brands now control nearly 70% of the world’s largest auto market.

The Details

Mercedes-Benz China sales plunged 27% year-over-year in Q3 2025, according to The Independent.
BMW and Mini combined sales dropped 11.2% in the first nine months of 2025.
Ferrari reported a 13% decline in shipments to mainland China, Hong Kong, and Taiwan from January through September.
Porsche and Aston Martin also cited weaker demand in China during recent earnings calls.
Mercedes-Benz CEO Ola Kallenius warned investors that “hyper-competition in China is not going away anytime soon.”

By The Numbers

Premium car market share (2017-2023): 15% of total China sales
Premium car market share (2024): 14%
Premium car market share (Jan-Sept 2025): 13%
Chinese brands market share: Nearly 70% (first 11 months of 2025)
German brands market share: 12%
Japanese brands: Around 10%
U.S. brands: Nearly 6%
BYD price cuts: Up to 34% on select models
China trade-in subsidy: 20,000 yuan ($2,830) for EVs and plug-in hybrids

EVXL’s Take

This collapse validates what we have been tracking for over a year. The math is brutal: when a BYD Seal offers comparable performance to a Porsche Taycan at one-third the price, heritage badges lose their pricing power. S&P Global Ratings director Claire Yuan summarized the shift: “Their (Chinese carmakers’) products are more competitive and more affordable even in the premium segment.”

The property market downturn and shifting cultural attitudes toward conspicuous consumption are accelerating the decline. As we detailed in our coverage of German automakers facing an existential crisis in China, European brands miscalculated how quickly Chinese competitors would move upmarket. BYD has already overtaken Volkswagen as the top-selling brand in China, and premium models from Chinese manufacturers now offer superior technology at dramatically lower prices.

Frequently Asked Questions

Why are Chinese consumers abandoning European luxury cars? A slowing economy, property market downturn, and superior technology from domestic brands like BYD at lower prices are driving the shift.
How much has China’s premium car market shrunk? Premium vehicles fell from 15% of total sales (2017-2023) to just 13% in the first nine months of 2025.
Is BYD winning the luxury segment? BYD is now the best-selling car brand in China for new energy vehicles and has cut prices up to 34% to pressure both domestic and foreign rivals.