Luxury European automakers are getting crushed in China

Rolls-Royce, the British marque owned by BMW, has also faced weaker sales in China this year. Its luxury car marker was experiencing “more challenging times,” CEO Chris Brownridge told Bloomberg in September.

The Chinese market has become increasingly difficult for European brands.

Volkswagen was dethroned by BYD as China’s biggest carmaker last year, and the share of China’s car market held by German automakers has dropped from about a quarter before the pandemic to less than 15%, according to Bloomberg data.

“China is an incredible challenge, not just for Porsche,” said finance chief Lutz Meschke in comments reported by Reuters. “In the future, we can no longer assume that China will return to where it was for European players.”

High-tech competition

Upmarket European automakers are being squeezed by their Chinese rivals.

Many are offering vehicles packed full of novel features and intelligent software of them have growing designs on China’s high-end auto market, and are

Last year Tesla rival BYD launched the Yangwang U8 SUV last year. The $150,000 hybrid has a motor on each wheel that allows it to move like a crab.

The U8 also comes with an onboard drone, and BYD says it can even float on water for up to 30 minutes.

Other Chinese automakers have gone to even greater lengths to stand out in the country’s red-hot auto market, with Zeekr showing off the spacious and luxurious interior of its MIX minivan by having an executive eat a hot pot inside it.

They’re likely to face a bumpy road as they try to recover, however.

Because the premium vehicle market is less price-sensitive, Dyer said more Chinese automakers will move into it to diversify away from China’s brutally competitive mass market.

As well as increased competition, European automakers face a geopolitical headache.

Tim Urquhart, principal automotive analyst at S&P Global Mobility, told BI the European Union’s tariffs on Chinese automakers meant Beijing could impose levies on European car imports in retaliation.

“They could be facing a perfect storm if those tariffs are imposed as well,” he said.

Even if that does happen, Urquhart said the sheer size of the Chinese market means it’s unlikely that major Western automakers will abandon it anytime soon. “They can’t afford to make a full-scale retrenchment and retreat from their current position, especially as they’ve invested so much there.”