The Chinese luxury car market is experiencing a slowdown as the country's economy slows down, with consumers opting for more affordable Chinese brands over foreign luxury cars. This shift is impacting European carmakers like Porsche, Aston Martin, Mercedes-Benz, and BMW, which have dominated the market for years. The slowdown is attributed to a prolonged property downturn and a cautious spending attitude among consumers, especially the wealthy, who are less inclined to publicly display their wealth. The Chinese government's trade-in subsidy for electric and plug-in hybrid vehicles has also influenced buyers to opt for cheaper, entry-level cars, many of which are Chinese-made.
The market share of premium car sales in China, typically priced above 300,000 yuan ($42,400), has been on a downward trend. In 2024, it fell to 14%, and in the first nine months of 2025, it dropped further to 13%. This trend is partly due to Chinese automakers' aggressive technological innovation, offering new electric vehicles and hybrids at competitive prices, including in the premium segment. As a result, foreign brands are losing momentum.
Chinese brands have gained significant market share, with passenger car sales reaching nearly 70% in the first 11 months of the year, according to the China Association of Automobile Manufacturers. German, Japanese, and U.S. brands now hold 12%, 10%, and 6% shares, respectively. BYD, a Chinese electric vehicle maker, has already surpassed Volkswagen as the top car seller in China and is the best-selling brand for 'new energy vehicles' this year.
The luxury car market's downturn is affecting dealerships, with used luxury cars selling at lower prices. Sales of Mercedes-Benz, BMW, and Mini vehicles in China have declined, and even Italian luxury carmaker Ferrari reported a 13% year-on-year drop in car shipments to mainland China, Hong Kong, and Taiwan in January-September. The CEO of Mercedes-Benz, Ola Kรคllenius, warned that hyper-competition in China is likely to persist.
The Chinese government's trade-in subsidy for electric and plug-in hybrid vehicles has influenced buyers to opt for cheaper, entry-level cars, many of which are Chinese-made. This shift is impacting European carmakers like Porsche, Aston Martin, Mercedes-Benz, and BMW, which have dominated the market for years. The slowdown is attributed to a prolonged property downturn and a cautious spending attitude among consumers, especially the wealthy, who are less inclined to publicly display their wealth.
