BMW bets on Neue Klasse EVs to reverse 30% China sales drop

BMW Bayerische Motoren Werke AG reported a 30% decline in China sales during the second quarter of 2026, deepening a two-year slide that has forced the German automaker to pin its recovery hopes on the Neue Klasse electric vehicle platform launching later this year.indexbox+2

The results, disclosed on July 11, dragged BMW's global deliveries down 4.9% to 590,962 vehicles for the quarter, even as growth continued in Europe and the Americas. Under new CEO Milan Nedeljkovic, the company issued its third profit warning in less than three years last month, cutting its automotive EBIT margin target to 1–3% from a prior 4–6%.wsj+3

A Market That Moved On

BMW's struggles mirror a broader rout among German automakers in China. Volkswagen, Mercedes-Benz, and Porsche Dr. Ing. h.c. F. Porsche AG all saw quarterly China sales fall between 30% and 41%, according to Fortune. Chinese passenger car sales overall dropped 24% in the first half of 2026, but domestic brands have gained share at the expense of foreign rivals.fortune+1

Only about 5% of BMW's China sales are fully electric, in a market where EVs now account for 46% of vehicle sales, according to Reuters. Chinese buyers increasingly favor local brands such as NIO ↗ 0.83%, Geely's Zeekr, and Xiaomi, which offer software-rich, intelligent vehicles tailored to local preferences. Wang Xianbin, vice president of the Gasgoo Research Institute, told Reuters that "Chinese consumers no longer buy into" the engineering heritage that underpins BMW's appeal in Western markets.reuters

The Neue Klasse Gamble

BMW's first Neue Klasse model for China, the iX3 SUV, is scheduled to go on sale in November. Unveiled at Auto China 2026 in Beijing in April alongside the i3 Long Wheelbase, the vehicle promises over 900 km of range, 800-volt architecture, and ultra-fast charging. The company has also cleared its existing China EV lineup, halting production of three older electric models in July to make way for the new platform.electriccarsreport+2

Yet analysts question whether the Neue Klasse arrives too late. Yale Zhang, managing director at Shanghai-based Automotive Foresight, told Reuters that if the platform "had launched two years earlier, it could have been a game-changer," but in today's Chinese market "it is hard to stand out". Hendrik Schmidt of DWS, a top-10 BMW investor, said direct China experience was limited among the company's leadership and that the scale of the challenge had not been fully appreciated.reuters

Uphill Battle

Consultancy AlixPartners expects China's light vehicle sales to fall roughly 10% for all of 2026. With BMW's Neue Klasse production at its Shenyang joint venture ramping through next year, the automaker faces a narrowing window to prove it can compete against rivals that develop new models in roughly 18 months — about twice as fast as traditional carmakers.automotivemanufacturingsolutions+2