BMW and Mercedes quarterly sales hammered by China factor

Berlin — Sluggish demand and stiff competition in China hit third-quarter sales at BMW and Mercedes, the German luxury automakers said on Thursday.

The German car sector is facing multiple challenges, from high production costs and managing the shift to electric vehicles (EVs) besides falling demand and rising competition from China.

The troubles have been illustrated most recently by a cost-cutting drive at Volkswagen, Europe’s biggest automaker, which is considering plant closures in Germany for the first time.

For the July-September quarter, BMW’s sales fell 13%, while Mercedes reported a 3% drop.

Demand in China, the world’s biggest auto market, is suffering from a flagging economy, while foreign carmakers face stiff competition from local manufacturers offering cheaper models, especially EVs.

BMW’s sales in China slumped by a third while Mercedes reported a 13% drop.

Mercedes also noted a subdued global battery electric vehicle (BEV) market, reporting a 31% BEV sales drop. For BMW, BEV sales rose 10% in the quarter.

The EU recently imposed hefty tariffs on Chinese-made EVs, saying they benefit from unfair state subsidies. Beijing denies that and has threatened retaliation, while German automakers, which make about a third of their profits in China, have voiced concern and called for more talks.

European consumers are reluctant to buy more expensive EVs, in part because of patchy charging infrastructure.

BMW and Mercedes shares were flat after the sales data. The shares down 23% and 9%, respectively, so far this year, while the pan-European automotive index is down 13%.

The companies cut their annual forecasts in September citing a sluggish Chinese market, while BMW also mentioned problems with a braking system supplied by Continental.

Reuters