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Market Analysis

Mercedes and BMW's quarterly sales decline due to a weak China
Amos Simanungkalit · 10.1K Views

17

Sluggish demand and intense competition in China impacted third-quarter sales for BMW (ETR) and Mercedes, the German luxury car manufacturers announced on Thursday.

The German automotive industry is grappling with several challenges, including high production costs, the transition to electric vehicles, dwindling demand, and increased competition from China.

Recent developments have highlighted these issues, particularly Volkswagen's (ETR) cost-cutting initiatives, which include potential plant closures in Germany for the first time.

For the July-September quarter, BMW experienced a 13% decline in sales, while Mercedes reported a 3% decrease.

Demand in China, the world's largest auto market, is being hindered by an ailing economy, and foreign automakers are facing tough competition from local manufacturers that offer lower-priced models, particularly in the electric vehicle sector.

BMW's sales in China dropped by one-third, and Mercedes experienced a 13% decline. Additionally, Mercedes highlighted a sluggish global market for battery electric vehicles (BEVs), reporting a 31% decrease in BEV sales, while BMW saw a 10% increase in BEV sales for the quarter.

Recently, the European Union imposed significant tariffs on Chinese-made EVs, claiming they benefit from unfair state subsidies, a charge Beijing has denied and threatened retaliation for. German automakers, which generate about a third of their profits in China, have expressed concern and called for further discussions.

European consumers are hesitant to purchase more expensive EVs, partly due to inconsistent charging infrastructure.

Following the release of these sales figures, shares in BMW and Mercedes remained stable. In September, both companies reduced their annual forecasts, citing a sluggish market in China, and BMW also referenced issues with a braking system provided by Continental.

So far this year, BMW and Mercedes shares have declined by 23% and 9%, respectively, while the pan-European automotive index has dropped by 13%.

 

 

 

 

 

 

Paraphrasing text from "Reuters" all rights reserved by the original author.

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