German Luxury Car Dilemma: Third Quarter Sales Decline

Once upon a time, consumers took pride in driving a BBA, and Porsche was a flaunting tool for most "internet celebrities." However, with the advent of the new energy era, everything has "changed."

Are Mercedes and Porsche no longer appealing?

The Chinese market used to be the largest market for German luxury car manufacturers in terms of sales, but it has now become the market with the largest decline in sales. In the third quarter, BMW's sales in the Chinese market fell by 0.4% year-on-year to 147,000 units. Mercedes-Benz and Porsche sold 125,000 and 110,000 units in China in the third quarter, respectively, representing year-on-year declines of 27% and 20.7%.

The sales information for the first three quarters released by Porsche's official website shows that the main reason for this decline is still the challenging market environment, especially in the luxury car segment and the intense competition in the Chinese market.

Some industry insiders believe that the slow transition to electrification by German luxury brands has caused this situation. In particular, Mercedes-Benz and Porsche have performed poorly in the electric vehicle market. The EQ series, which Mercedes-Benz had just established a reputation for, has already been discontinued.

Porsche, despite being the earliest ultra-luxury brand to launch electric vehicles, did not develop exclusive models for the Chinese market, and the performance of its products in the market did not meet expectations. In September this year, Porsche significantly adjusted its product strategy, shifting back towards fuel and hybrid vehicles, while slowing down the pace of electric vehicles.

BMW, which has performed relatively well, has gained a certain market share by relying on "discounts." Online data shows that the price reduction for the BMW 5 Series is the most significant, with the entry-level model dropping from 439,900 yuan to about 260,000 yuan, a decrease of 40%.

Being left behind by the times?

Independent brands have changed the landscape of the luxury market through new energy and intelligence. The price range of 700,000 yuan seems to have already been conquered by independent luxury brands.

On September 12 this year, the Yangwang U8L long-wheelbase version achieved over 20,000 blind orders in a single day, setting a new pre-sale record for high-end SUVs in China. By September 16, the Zun Jie S800 garnered more than 14,000 orders upon opening for reservations, figures that are close to the total sales of the "78S" model in the first half of this year.

In addition, many brands have launched "9 series" models, continuously targeting the luxury market above 300,000 yuan. With the changes in the economic situation in recent years, consumer psychology has also started to change. Compared to brand premium, consumers are more inclined towards genuine experiences.

In addition to the explosive growth of domestic brands, the American brand Tesla has also performed well. According to the latest data released by the China Passenger Car Association on October 10, Tesla's sales of electric vehicles produced in China increased by 2.8% year-on-year in September, and grew by 9.2% compared to August, reaching 90,812 units. With its advantage in timing, Tesla has gained a significant share in the Chinese market, notably capturing many potential customers from BBA (BMW, Benz, Audi).

The experience of German luxury brands confirms the popular saying: "When the times abandon you, they don't even say goodbye." It also makes the established luxury brands feel what Chinese speed is.