(Bloomberg) -- BMW AG and Mercedes-Benz Group AG’s quarterly sales plunged in China as German automakers suffer from weak consumer demand and a rapid shift to electric vehicles from local rivals.
Sales of BMWs and Mini cars — also made by the Bavarian company — recorded their steepest drop in more than four years, falling 30% in the third quarter in China. Mercedes deliveries there declined 13% amid weak demand for pricey models like the S-Class and Maybach.
Volkswagen AG, BMW and Mercedes have long dominated sales of high-end gasoline-powered cars in China but are now falling behind local manufacturers like BYD Co. that have seized the upper hand with innovative and affordable plug-in models.
EVs and plug-in hybrids have surpassed 50% of car sales in China, according to data from the China Passenger Car Association. Beijing’s sales incentives for EVs have boosted domestic carmakers, while a recent economic stimulus has sparked fresh demand.
German carmakers have been left behind as consumers remain wary about spending on high-end goods due to a protracted real estate crisis, and shift away from gasoline-powered cars. The problems in China, along with slowing growth for EVs in Europe, have contributed to profit warnings from all three German carmakers.
BMW, Mercedes and VW may also lose out from escalating trade tensions: Beijing has said it’s considering raising duties on imported large-engine vehicles after the European Union voted to impose tariffs of up to 45% on Chinese-made EVs.
The 30% fall for BMW and Mini brands in China compares with declines of less than 5% in both the first and second quarters from a year earlier. The slump in the world’s biggest auto market dragged overall BMW group vehicle sales down 13% globally. The company said a braking systems recall also affected deliveries.
At Mercedes, sales of top-end cars fell 12% in the latest period, undermining the company’s strategy of pushing further upmarket.
BMW and Mercedes shares were little changed on Thursday, but they’ve fallen 23% and 7% this year, respectively, amid the run of bad news from both companies. After all three major German carmakers cut their financial guidance in September, investors have been braced for further weakness in deliveries.
BMW’s EVs
While BMW sales declined in every region, EVs are proving a relative bright spot as other European manufacturers struggle. Deliveries of battery-powered BMWs such as the i4 sedan and iX1 sport utility vehicle rose 10% to 103,440 units in the third quarter compared with a year earlier.
The results contrast sharply with those of Mercedes, which said its wholesale deliveries of passenger EVs plummeted 31% to just 42,500 units. The company said its plug-in hybrid sales rose 10% on robust demand in the US.
Mercedes’ latest EVs have been met with a tepid response from consumers in Asia’s powerhouse economy and elsewhere. Younger drivers in China are increasingly turning to homegrown brands that are perceived to have more advanced in-car digital and entertainment technology.
Chinese brands claimed 19 of the 20 best-selling electric models in China in July, with only Tesla Inc.’s Model Y making the ranking, according to a report from Clean Technica.
Volkswagen, which owns the Audi and Porsche brands, is due to report third-quarter deliveries on Friday.
--With assistance from Craig Trudell.
(Updates with Chinese EV sales throughout. In a previous version of this story, the company corrected a historical comparison of BMW’s sales drop in the second paragraph.)
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