High-end car sales sink in China as its economy slows, taking a toll on European automakers.

The Challenges of High-end Car Sales A Reality Check in China as its Economy Slows

As the Chinese economy continues to experience a slowdown, the demand for foreign luxury cars has begun to wane. Instead, consumers are increasingly opting for more affordable Chinese brand models, often sold at discounted prices, which cater to their desire for advanced electronics and comfort.

The Luxury Market Takes a Hit

The prolonged property downturn in China has left many consumers with little appetite for big-ticket purchases. Additionally, the affluent are becoming increasingly discreet about publicly displaying their wealth, according to Paul Gong, head of UBS's China Automotive Industry Research.

Multifaceted Challenges Facing European Carmakers

For European carmakers like Porsche, Aston Martin, Mercedes-Benz, and BMW, which have traditionally dominated the upper reaches of the world's largest auto market, this trend is a cause for concern. Many car buyers are being swayed by a 20,000 yuan ($2,830) trade-in subsidy offered by the Chinese government for purchasing electric and plug-in hybrid vehicles.

Chinese Automakers Take the Lead

While luxury auto sales have slowed, Chinese manufacturers, including electric vehicle maker BYD, have become more aggressive than many Western brands in technological innovation. They frequently roll out new electric vehicles and hybrids at competitive prices, including premium vehicles, analysts say.

A Competitive Advantage for Chinese Carmakers

Their products are more competitive and affordable even in the premium segment, says Yuan. That's why these foreign brands are gradually losing momentum. BYD has overtaken Volkswagen as the biggest car seller in China in recent years, with BYD being the best-selling car brand this year in China for 'new energy vehicles,' which include electric vehicles and hybrids, according to the China Passenger Car Association.

A Reversal of Market Share

The market share of premium car sales in China, usually priced above 300,000 yuan ($42,400), more than doubled between 2017 and 2023 to about 15 percent of total sales. However, this trend is now reversing. The share of premium cars sales fell to 14 percent in 2024 and to 13 percent in the first nine months of 2025.

Used Luxury Cars Selling at a Discount

The downturn in interest in luxury vehicles has hit dealerships hard. Li Yi, a salesperson at a Beijing Porsche center, notes that used luxury cars are selling at significantly lower prices over the past year. It's mainly due to the sluggish economic situation, Li says. Not only Porsche, but Benz, BMW, Bentley, and Rolls-Royce all face the same situation.

Conclusion

As China's economy continues to slow down, the demand for foreign luxury cars has begun to wane. Chinese manufacturers have become more aggressive in technological innovation, frequently rolling out new electric vehicles and hybrids at competitive prices. This trend is expected to continue, with European carmakers like Porsche, Aston Martin, Mercedes-Benz, and BMW facing significant challenges in the market.

Keywords Luxury Cars, China's Economy, Automotive Industry, Electric Vehicles, Hybrid Vehicles, Premium Segment

Edward Lance Arellano Lorilla

CEO / Co-Founder

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