Chinese carmakers shift to premium models as sales fall at home

Beijing Auto Show highlights industry pivot to value-for-money strategy after years of electric vehicle price wars.

Chinese electric vehicle manufacturers launched a wave of premium models at this year's Beijing Auto Show, targeting customers of German brands including Porsche, Mercedes-Benz and BMW with feature-rich vehicles priced significantly below European rivals¹². The show, which opened on Friday, featured 181 model debuts and 71 concept cars, including what industry officials described as a flood of large premium SUVs¹².

The shift represents what Bo Yu, Greater China country manager at research firm Jato Dynamics, characterised as a transition from a price war to a value-for-money war¹². Chinese companies including Geely and Nio have spent recent years developing technologically advanced, low-cost electric vehicles and are now applying that expertise to upmarket segments¹².

German manufacturers have faced declining sales in China, the world's largest car market. Cumulative sales by German carmakers fell nearly 25% to 3.85-million vehicles in 2024 from 5.1-million in 2019, according to S&P Global Mobility data¹². Mercedes-Benz, BMW, Porsche and Audi all reported first-quarter sales declines in China¹². Volkswagen, China's top carmaker for 25 years, was overtaken by BYD in 2024 and by Geely in 2025³.

The transformation has been beyond imagination, according to Volkswagen brand China CEO Robert Cisek, who acknowledged that younger customers may perceive German brands as for the parents³.

Domestic market pressures are driving Chinese manufacturers overseas. China's car sales fell 18% in the first quarter from a year earlier and are expected to remain flat or decline in coming months⁴⁵. The country exported 5.8-million cars last year, an increase of almost 20% from the previous year⁴⁵. Overall vehicle exports are forecast to grow 4% to 7.4-million this year⁴⁵.

Chinese EVs remain cost-competitive in European markets despite tariffs, according to industry analysts, while the US market remains closed to Chinese vehicles⁴⁵. Pedro Pacheco, an analyst at Gartner, said Chinese automakers need deployment roadmaps for Europe, Latin America and Southeast Asia⁴⁵.