VW, BMW, Mercedes each lose 30%+ in China sales

Volkswagen, Mercedes-Benz, and BMW Bayerische Motoren Werke AG each suffered sales declines of at least 30% in China during the second quarter of 2026, as local electric vehicle competitors continue to outpace Europe's legacy automakers in the world's largest car market.investing+1

Volkswagen posted the steepest year-on-year drop at 36.6%, with deliveries falling to 424,300 vehicles in the April-to-June period. BMW and Mini brand sales in China slumped 30%, while Mercedes-Benz car deliveries fell 8% globally, with China representing the sharpest regional drag.reuters+4

Local Rivals Pull Ahead

The German brands, which built their dominance in China on combustion engine heritage, are struggling to compete with domestic manufacturers led by BYD, which unseated Volkswagen as the market's top-selling carmaker in 2024.investing

"They're trying to play catch-up at a very rapid pace, whilst their competition is running at twice the speed," said Paul Bennett, managing partner at advisory firm Madox Square, as quoted by Reuters.reuters+1

Volkswagen sales executive Marco Schubert acknowledged the difficulty, saying the company "was unable to escape the overall market decline of around 20%, despite initial positive momentum from our newly launched, locally developed electric vehicles."investing

Car sales in China fell for a ninth consecutive month in June, according to Reuters, prompting Chinese automakers to increasingly turn to export markets including Europe.reuters+1

European Policy Response Takes Shape

None of the three German automakers were able to offset their China losses elsewhere, recording global sales declines of 8.6%, 8%, and 4.9% respectively. The erosion has intensified debate within the European Union about how to respond to China's growing industrial dominance.reuters+1

The EU's Industrial Accelerator Act, published in March 2026, creates a "Made in Europe" framework requiring manufacturers to meet local-content thresholds to qualify for procurement benefits. Beginning in July 2026, the bloc will also cut tariff-free steel quotas by 47% and double out-of-quota duties to 50%, while a proposed "overcapacity instrument" would allow Brussels to respond to systemic market distortions across sectors including batteries and clean technology.atlanticcouncil

Analysts at the European Think Tank Network on China warned in a June report that China's drive to become a global leader in science and technology has "huge implications" for the EU, requiring both innovation in specialized technologies and bold policy action.clingendael