MAJOR GERMAN CARMAKERS HIT BY STEEP CHINA SALES PLUNGE

Major German carmakers reported steep sales declines in China for the April-June quarter, according to the Associated Press and Fortune, as weakening demand and fierce domestic competition hit some of Europe's most important auto brands. Volkswagen, Mercedes-Benz, BMW and Porsche all reported China sales drops of between 30% and 41% from the same period a year earlier. For the first half of 2026, all four reported China sales declines of more than 20% year-on-year. The figures show how quickly foreign carmakers are losing ground in the world's largest auto market.

Volkswagen Group reported one of the clearest signs of pressure. The Associated Press reported that Volkswagen deliveries in China fell 36.6% during the quarter to 424,300 vehicles. That decline helped drag Volkswagen's global sales down 8.6%, even as deliveries increased in Europe and the Americas. Volkswagen has long treated China as one of its most important markets, but the latest results show that gains elsewhere are not enough to offset a sharp fall in Chinese demand. The company also said it would cut its model lineup by up to half after the sales declines, according to the Associated Press.

The causes cited in the reporting are both economic and competitive. China's prolonged property-sector downturn and broader economic slowdown have weakened consumer sentiment and made buyers more cautious about large purchases. At the same time, China's domestic auto market remains locked in an intense price war, with local brands competing aggressively on price, technology and model updates. The Associated Press reported that many drivers are increasingly choosing more affordable Chinese brands. That shift is especially damaging for German automakers that built their China positions around premium combustion-engine models and long-standing joint ventures.

The broader market is also shrinking. The Associated Press reported that China's domestic passenger car sales fell 24% in the first half of the year to nearly 8.3 million vehicles. For foreign brands, the challenge is not only that fewer consumers are buying cars. It is that Chinese automakers are taking a larger share of the buyers who remain active, especially in electric and software-heavy vehicles.

The pressure is no longer confined to China. The Associated Press and Fortune reported that German automakers face intensified competition from Chinese companies outside China, including in Europe, as brands such as BYD expand overseas. Chinese automakers have become more competitive on battery technology, software integration, pricing and the pace of new model releases. That creates a two-front challenge for German brands: falling sales in China, and stronger Chinese competition in export markets that European manufacturers once treated as safer ground.

The sales declines have squeezed overall profits and, in some cases, offset gains from other regions. Mercedes-Benz said China was facing a significantly weaker overall market and macroeconomic environment, according to the Associated Press. German carmakers remain stronger in internal-combustion vehicles than in electric vehicles, at a time when China's market is increasingly shaped by electric models, connected-car features and fast product cycles. That puts legacy engineering strengths under pressure from newer buying preferences.

The results also carry wider implications for Germany's industrial base. Autos are one of Germany's most important export and manufacturing sectors, and China has been central to the global strategies of Volkswagen, BMW, Mercedes-Benz and Porsche for years. A prolonged decline in China sales could affect earnings, investment plans, supplier networks, factory utilisation and employment decisions. It could also increase pressure on German automakers to accelerate China-specific electric vehicle development and simplify model lineups in order to compete with faster-moving domestic rivals.

The next developments to watch are third-quarter China deliveries, any new pricing moves by German brands, and whether the companies revise profit guidance or announce deeper China restructuring. For now, the public record is that all four major German carmakers suffered steep China sales declines in the April-June quarter, and the downturn reflects a combination of weak demand, domestic competition and a rapidly changing auto market.

Fact-check date: 12 July 2026
Article type: News
Sources: Associated Press; Fortune; company delivery data from Volkswagen, Mercedes-Benz, BMW and Porsche