High-End Car Sales Decline in China, Impacting European Automakers
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High-end car sales in China are experiencing a significant decline as consumers shift their preference towards more affordable local brands. According to the South China Morning Post, the demand for foreign luxury cars is waning, with customers increasingly opting for Chinese models that are often sold at substantial discounts.
This trend poses challenges for European automakers such as Porsche, Aston Martin, Mercedes-Benz, and BMW, who have long dominated the luxury segment in the world's largest auto market. The decline is compounded by a prolonged property downturn, which has left many consumers reluctant to make large purchases, while wealthier individuals are becoming more discreet about displaying their affluence, as noted by Paul Gong, UBS head of China Automotive Industry Research.
Furthermore, a trade-in subsidy of 20,000 yuan, or approximately $2,830, for electric and plug-in hybrid vehicles has incentivized buyers to choose cheaper, entry-level cars, which are predominantly Chinese-made.
Claire Yuan, director of corporate ratings for China autos at S&P Global Ratings, highlighted that the market share of premium car sales, usually priced above 300,000 yuan, has reversed from a high of 15% of total sales in 2023 to 13% in the first nine months of 2025.
Chinese manufacturers like BYD are aggressively innovating and rolling out new electric vehicles, making them more competitive even in the premium segment. In stark contrast, Mercedes-Benz reported a 27% drop in sales in China for the July-September quarter, and BMW’s sales dropped 11.2% year-on-year in the first nine months of 2025.
The used luxury car market is also suffering, with significant discounts being offered as prices slide; a 2024 Porsche Panamera was recently seen selling for much less than its original purchase price due to the sluggish economic conditions.
Overall, the luxury vehicle sector is facing intense competition and a challenging market environment, as highlighted by recent statements from industry executives.