The three main premium German car manufacturers namely Mercedes, BMW and Audi are having a tough time economically of late. We can all see the decline in sales in our own markets because there German brands are not selling like they used to and this is noticeable on the roads. That is what I thought and this is correct for two of the three brands only.
The Chinese and US markets do play a major role in their finances due to the size of these markets. Over the last 5 years all 3 major German car brands have lost in the region of 50% market share of what they had in 2020. The problem is that the Chinese car market is shifting heavily to electric vehicles and the German companies are struggling to compete against new local Chinese manufacturers.
The competition the 3 German auto giants are facing is unlike any normal competition they have faced before. The Chinese electronics giant Xiaomi Corporation that is known for manufacturing cell phones and domestic electronic appliances started selling EV's only two years ago. Xiaomi is now reportedly selling 50 000 EV's monthly. The result for this company is that their net profits have been rising at around 44% with their revenue growing at 25% year on year. The net profit was reported at $5.74 billion for the financial year ending 2025.
If we look at how the 3 German car manufacturers faired last year there are definitely worrying signs with major cracks appearing. Audi saw a 14% decline in profits achieving $4 Billion, Mercedes recorded a 49% drop achieving $6.2 Billion profit and BMW only a 3% decline achieving $8.73 Billion in profits.
Xiaomi is just one of many new Chinese car manufacturing companies that are diluting the premium market which the German car manufacturers once dominated in China. At one stage they had nearly 70% market share of the premium sector and this is expected to shrink to around 15% over the next couple of years.
As a market share of the Chinese EV market all the German manufacturers combined so including these 3 listed above and VW they have in the region of 5%. The biggest issue is that the German auto manufacturers were known for their world leading technology and for many of the technology parts they are now relying on Chinese companies to keep them relevant.
The other aspect of lost sales has been coming from the US market which has not impacted Mercedes and BMW significantly like it has Audi. Mercedes and BMW have car manufacturing plants in the US so the import tariffs do not affect them like Audi who are a full import due to having no manufacturing foot print in the US.
Getting some idea on the global sales numbers in 2010 Audi recorded over 2 million vehicle sales annually. This last year Audi had sales of 1.6 million vehicles so in 15 years they have only dropped 20% taking into account all that has happened these numbers are still respectable but also worrying. Mercedes peaked globally with 2.3 million vehicle sales in 2018 and last year recorded 1.8 million sales so a 25% drop in the last 7 years. BMW is bucking the trend as they peaked in 2023 with 2.55 million vehicle sales and last year achieved 2.5 million of which 17% were electric vehicles. For some reason BMW is getting things right and are maintaining their growth sales.
Whatever BMW are doing it is working and Mercedes and Audi should be taking notes because at this rate BMW will be selling what Mercedes and Audi are achieving combined.
Just to add to this the VW Group saw operating profit drop by 53% to $10.4 billion for 2025. Again this is US Tariffs and the Chinese decline in sales impacting profitability. One would imagine VW would be the manufacturer to fell this more than most others due to being predominately classed in the volume sector. Porsche saw a 98% drop in profits last year so there is trouble amongst certain brands within the VW Group.