Structural Decline of BBA in China's Luxury Auto Market and Assessment of 2026 Strategic Responses

Now I have completed a comprehensive and in-depth analysis. Below is the full research report:

---

In 2025, the traditional trio of German luxury automakers (BBA) saw a collective sharp decline in their sales in China. The combined sales of the three brands decreased by approximately 260,000 units compared to 2024, representing a year-on-year drop of 12.3%[1]. This phenomenon is not a cyclical fluctuation, but rather a reflection of in-depth structural challenges. Based on the latest market data, this report systematically analyzes the structural causes of BBA’s market share loss, and assesses whether their intensive new product offensive in 2026 can fend off the systemic impact of domestic high-end brands.

---

Brand	2024 Sales	2025 Sales	Change in Volume	YoY Change	Trend Characteristics
Mercedes-Benz	714,000 units	551,900 units	-139,000 units	-19.0%	Largest decline
BMW	714,500 units	625,500 units	-89,000 units	-12.5%	YoY decline exceeding 10% for two consecutive years
Audi	649,000 units	617,000 units	-32,000 units	-4.9%	Relatively stable
Total	2,077,500 units	1,794,400 units	-283,100 units	-13.6%	Significant market share loss

• Mercedes-Benz’s China deliveries plummeted from 714,000 units in 2024 to 551,900 units, with a 19% decline, the most severe among all global regions[1]
• BMW has seen a YoY sales decline of over 10% in the Chinese market for two consecutive years (-13.4% in 2024, -12.5% in 2025), showing a trend of “double-digit consecutive decline”[1]
• Although Audi had the smallest decline (4.9%), it mainly relied on its fuel vehicle base; FAW Audi’s fuel vehicle sales and market share returned to the top in the fuel luxury vehicle market for the first time in 6 years[1]

• Data from the China Passenger Car Association (CPCA) shows that brands with an average transaction price exceeding 300,000 RMB sold a total of 2.09 million units from January to November 2025, a YoY decline of 10%[2]

• The terminal prices of entry-level models of the BMW 5 Series, Mercedes-Benz E-Class, and Audi A6L have dropped below 350,000 RMB, a plunge of over 100,000 RMB compared to the guide price, effectively withdrawing from the 400,000 RMB sales competition[3]
• Among the TOP 10 best-selling models in the 400,000 RMB segment in 2024, only two domestic models (AITO M9, Li Auto L9) made the list; by November 2025, this number has increased to 6 (NIO ES8, Zeekr 9X, Voyah Dreamer, AITO M8, AITO M9, Li Auto L9)[3]

• The Zunjie S800 (priced at 708,000-1,018,000 RMB) sold over 2,000 units in November 2025, equivalent to the total sales of the Mercedes-Benz S-Class, BMW 7 Series, and Audi A8[3]

---

BBA’s electrification dilemma is not a matter of product quantity, but a

:

Dimension	BBA Status Quo	Chinese Brands	Generational Gap Assessment
E/E Architecture	Mercedes-Benz MB.EA has not adopted central supercomputer + zone control architecture	Mainstream brands have completed 2-3 generations of iteration	2-3 years
Intelligent Driving	Partnership with Momenta/Huawei has just started	City NOA has been popularized in 200,000 RMB-level models	1-2 years
OTA Capability	MB.OS once had OTA failures that affected user experience	Monthly OTA is normalized	1-2 years
Localization Adaptation	R&D led by German centers, with limited voice for Chinese teams	Chinese teams are deeply involved in product definition	Organizational gap

McKinsey’s 2025 China Auto Consumer Insight Report shows that 50% of consumers refuse to pay a premium for foreign-brand electric vehicles, and the acceptance of brand premium for German luxury brands in the electric vehicle market has plummeted[2].

The traditional luxury brand formula of “brand premium = sales volume” is being broken:

• Price Erosion:
  The entry-level models of the once 400,000 RMB-level “56E” (BMW 5 Series, Mercedes-Benz E-Class, Audi A6L) have seen their terminal prices drop below 350,000 RMB[3]
• Loyalty Collapse:
  Survey data shows that the intent loyalty of BBA owners has generally fallen below 18%; among the intended users of AITO and Li Auto, 36.81% and 27.22% respectively come from the trade-in/upgrade demand of BBA owners[3]
• Experience Gap:
  Li Boxiao, Deputy General Manager of Voyah Automobile Sales Service Co., Ltd., stated bluntly: “The experience of traditional luxury brands BBA has fallen behind in all aspects, and there is a generational gap in technology”[2]

Starting from the second half of 2025, BBA dealerships in multiple regions have faced closures and operator disappearance:

• BBA dealership closures have occurred consecutively in Hangzhou, Dongguan and other regions
• Thousands of car owners were unable to recover their down payments and maintenance package fees
• The catering services at some traditional luxury brand 4S stores have been downgraded from premium self-service buffets to boxed meals or even instant noodles
• The channel crisis has further damaged the brand image, forming a negative cycle[2]

• BBA’s fuel vehicles are still the main profit source, but they are being eroded by accelerating new energy substitution
• In 2025, the share of new energy vehicle sales of BBA in China was less than 15%, far below the industry’s overall penetration rate of over 50%[2]
• The risk of “losing both fuel and electric vehicles” is emerging: lagging new energy transformation + loosening fuel vehicle base

BBA’s market share loss has obvious structural characteristics rather than cyclical fluctuations. The four factors – generational gap in electrification technology, gaps in intelligent experience, failure of brand premium, and channel system pressure – reinforce each other, forming a negative cycle, which cannot be reversed by a single new product launch.

---

Brand	Number of New Models	Core Models	Technology Platform/Partnerships
Mercedes-Benz	15+ models	All-new Long Wheelbase Pure Electric GLC, Long Wheelbase GLE, Mid-cycle Facelifted S-Class	MB.EA Pure Electric Platform, MMA Modular Architecture
BMW	20 models	Domestic Long Wheelbase New Generation iX3 (delivered in summer)	Neue Klasse Pure Electric-exclusive Architecture
Audi	Multiple models	Q6L e-tron, A6L e-tron, A5L Fuel Version	Huawei ADS Intelligent Driving System (in-depth cooperation)

• The Shanghai R&D Center focuses on optimizing the MB.OS system to solve previous technical problems
• The advanced driver-assistance system (ADAS) developed in partnership with Momenta has been equipped on the all-new pure electric CLA
• In the next 12-18 months, AI-enabled intelligent cockpits and ADAS will gradually cover the entire product matrix[2]

• Betting on the Neue Klasse architecture, which integrates 800V high-voltage architecture and 6th-generation eDrive system, improving energy efficiency by 30%
• ADAS developed in partnership with Momenta will be launched on the new-generation BMW iX3
• The intelligent cockpit adopts the domestic BMW New Generation Operating System X, with 70% of the source code independently developed by BMW China’s digital team, and integrates Alibaba’s AI large language model[2]

• Adopts the strategy of “technical cooperation + localized channels”, with in-depth cooperation with Huawei
• Multiple models including the Q6L e-tron and A5L are equipped with Huawei ADS Intelligent Driving System
• Huawei ADS 2.0 is adopted for fuel vehicles for the first time, realizing “intelligent driving for both fuel and electric vehicles”[2]
• Jointly built 10 lightweight outlets with FAW Audi and Zhongsheng Holdings, with order volume from new channels increasing by 40%[2]

---

Brand	2025 Sales	YoY Change	2026 Target	Growth Expectation
HarmonyOS Intelligent Mobility	589,100 units	+32%	1,000,000-2,000,000 units	Aggressive
NIO	326,000 units	+46.9%	456,000-489,000 units (+40-50%)	Enterprising
Xiaomi Auto	410,000+ units	New brand	550,000 units (+34%)	Enterprising
Li Auto	500,000+ units	+25%	>600,000 units	Steady
Zeekr	224,000 units	+69%	300,000 units	High-speed

• HarmonyOS Intelligent Mobility reached the milestone of cumulative deliveries exceeding 1,000,000 units in October 2025, setting the fastest record for new power brands to hit the million-unit mark[4]
• The AITO M9 has delivered over 260,000 units in the two years since its launch, firmly ranking first in the 500,000 RMB segment[5]
• As a domestic sedan in the 700,000 RMB+ segment, the Zunjie S800 delivered 11,300 units in half a year, breaking the ice in the ultra-luxury market[6]

• AITO: Stabilize the base (550,000 units target, including exports)
• Zhijie: Expand territory (150,000 units target, led by the V9)
• Xiangjie: Differentiation (stable S9 series, 100,000 units target)
• Zunjie: Elevate positioning (40,000 units target, MPV/SUV to be launched)
• Shangjie: Downward expansion (150,000 units target, Z7 targets Xiaomi SU7)[6]

Dimension	BBA	Domestic High-End Brands
Product Strategy	Dual layout of fuel and electric vehicles, passive response	Electrification-focused, intelligence as core
Pricing Strategy	Volume through price cuts, brand premium weakened	Value-based pricing, premium for technology attributes
Channel Strategy	Dealer system under pressure, exploring direct sales	Direct sales-oriented, user operation-driven
Technology Strategy	External cooperation (Huawei/Momenta)	Full-stack self-developed, vertical integration

---

Scenario	BBA 2026 Sales	HarmonyOS Intelligent Mobility	Market Landscape
Base Scenario	550,000-630,000 units (-5~10%)	800,000-1,000,000 units	Chinese brands hold >55% share in the 300,000 RMB+ market
Optimistic Scenario (BBA)	680,000-750,000 units (decline halted)	900,000-1,100,000 units	BBA’s share stabilizes at 35-40%
Pessimistic Scenario (BBA)	500,000-550,000 units (accelerated decline)	1,200,000+ units	Chinese brands hold >65% share

1. Effectiveness of Huawei/Momenta Technical Partnerships
   • If Huawei ADS can match the experience of leading domestic brands, BBA is expected to stem losses in the intelligence dimension
   • Huawei ADS-equipped models such as the Audi A5L and Q5L will be the first test samples

2. Product Definition Rights of Chinese Teams
   • BMW’s domestic New Generation Operating System X, with 70% of its code independently developed, is a positive signal
   • If deep localization of “Made in China, for China” can be achieved, it may narrow the product generational gap

3. Channel System Stability
   • Restoring dealer confidence takes time; if the closure wave continues, it will pose systemic risks
   • Balancing direct sales and dealer networks will be a key issue

4. Ability to Withstand Price Wars
   • BBA’s brand heritage supports it to endure short-term losses in price wars
   • However, long-term price erosion will damage its luxury positioning

1. Insufficient Brand Heritage
   - Luxury perception takes time to cultivate
2. Profit Pressure
   - NIO’s net loss still reached RMB 3.481 billion in Q3 2025
3. Internal Competition
   - Risk of cannibalization among HarmonyOS Intelligent Mobility’s “Five Brands”
4. Supply Chain Stability
   - Supply of core components such as chips remains a hidden concern

---

• The generational gap in electrification technology (2-3 years) cannot be made up in the short term
• The brand premium logic has fundamentally failed in the electric vehicle era
• Consumer mindset has undergone irreversible changes

• New product launches are still passive responses, with a pace slower than market changes
• Technical cooperation (Huawei/Momenta) can make up for shortcomings but cannot build core advantages
• The channel crisis may further worsen

• BBA’s sales in China may drop below 550,000 units in 2026, returning to the level of a decade ago
• Domestic brands such as HarmonyOS Intelligent Mobility have aggressive targets (1-2 million units), which will further squeeze BBA’s market space
• BBA needs a 3-5 year window for in-depth transformation, and it is difficult to halt the decline in the short term

• Accelerate the delegation of product definition rights to Chinese teams to achieve true localization
• Establish deeper strategic partnerships with Chinese suppliers (Huawei, CATL, etc.)
• Redefine the connotation of “luxury”, shifting from “brand-driven” to “technology + experience-driven”

• The valuation logic of traditional luxury brands is facing restructuring, requiring re-evaluation of brand premium capabilities
• Pay attention to valuation repair opportunities brought by deepened cooperation between BBA and Chinese tech companies
• Be alert to chain risks caused by channel crises

• China’s auto market is redefining the “luxury” standard
• Electrification + intelligence have become core competitive elements
• The global auto industry landscape will be reshaped by the Chinese market

---

[1] 36Kr - “Can’t BBA Sell Anymore? 260,000 Fewer Units Sold in China in a Year, BMW’s YoY Drop Exceeds 10% for Two Consecutive Years” (https://m.36kr.com/p/3637793502514560)

[2] Yahoo Finance Hong Kong - “AITO, Li Auto Are Booming! BBA’s Sales in China Slump, Mercedes-Benz’s Decline Nears 20%; the 300,000 RMB+ Luxury Auto Market Is Re-shuffled” (https://hk.finance.yahoo.com/news/問界-理想殺瘋了-bba中國銷量下滑賓士衰退近2成30萬-220003224.html)

[3] 36Kr - “6 Domestic Models Among TOP10 400,000 RMB Luxury Cars” (https://m.36kr.com/p/3610397577806850)

[4] CRI Online - “Four Segments Advance Side by Side — Analysis of 2025 Automakers’ Production and Sales Express Reports” (https://auto.cri.cn/20260114/91c06296-ff27-4021-b49a-8cbfd1440059.html)

[5] Sina Auto - “AITO M9 Delivers Over 260,000 Units in Two Years Since Launch, Firmly Ranking First in the 500,000 RMB Segment” (https://tags.sina.com.cn/model_haohuache)

[6] 36Kr - “HarmonyOS Intelligent Mobility Ramps Up in 2026: Shangjie Z7, Zhijie V9 Lead the Charge” (https://m.36kr.com/p/3636416780858112)