German carmakers’ China sales fall a third since 2019

Volkswagen lost 5.8 billion euros ($6.5 billion) after tax in the July-to-September quarter, compared with a 1.1 billion euro loss a year earlier, as its business in China kept shrinking. Its falling position in the world's largest car market is the main reason for a restructuring that could cut up to 120,000 jobs by the end of the decade. BMW Bayerische Motoren Werke AG and Mercedes-Benz are also cutting jobs, and all three companies have issued profit warnings this year.afp.com+1

A Loss Driven by Porsche and China

The operating loss of about 5.9 billion euros, reported on October 29, was Volkswagen's worst quarterly result in more than a decade. It included roughly 8 billion euros of one-off charges, mostly from a writedown on its stake in Porsche Dr. Ing. h.c. F. Porsche AG. The company's results release listed a 6.4 billion euro non-cash goodwill impairment on Porsche and about 1 billion euros in impairments on Chinese assets. It also cited the weak Chinese market, rising price pressure and the growing share of lower-margin electric vehicles. Global deliveries fell 14.3% to 1.89 million vehicles, while deliveries in China fell 38.5% to 405,800.reuters.com+2

Volkswagen reached an agreement in principle with unions last month to cut another 50,000 jobs across the group, which brings planned reductions to 120,000. "Obviously, we want to close the deal with the unions as fast as possible," Chief Financial Officer Arno Antlitz said on the earnings call.economylens.com

A Rapid Reversal

AFP calculations show the three big German carmakers' annual deliveries in China fell by about a third between 2019 and 2025, to 3.87 million. Over the same period, Chinese brands' share of their home market rose from 37.8% to 65.3%, according to the China Passenger Car Association. Rivals such as BYD and Xpeng ↗ 6.67% gained ground with state backing for electric vehicles. New energy vehicles made up a record 67.8% of Chinese sales in October.afp.com

"The legacy automakers in China were bringing analogue toys to a digital party," said Tu Le of Sino Auto Insights. Ingo Speich of Deka Investment said Chinese buyers now link Volkswagen with petrol cars, not electric ones.france24.com

Moving Engineering East

German carmakers are shifting engineering work to China, both to compete there and to bring Chinese-developed technology into cars sold abroad. Volkswagen says it can now design cars from start to finish at its center in Hefei. The low-cost ID.Every1, due in Europe in 2027, will use an electric motor made in China. BMW and Volkswagen both hope to export cars from China to other parts of Asia-Pacific. Mercedes-Benz CEO Ola Källenius said in October that the company would overhaul its China strategy but would not walk away from the market. "There's not a play where you put China aside," he said.france24.com