Mercedes loses 30% of China sales as German EV brands fall behind Xiaomi and Nio

German automakers are rapidly losing ground on the world's largest electric vehicle market. Mercedes-Benz saw its China sales plunge 30% in the second quarter, forcing the company to cut its full-year revenue and delivery forecasts below 2025 levels, when its China sales were already down 19%.

The group's overall results look deceptively solid: operating profit (EBIT) rose 22% year over year to €1.5 billion. But the regional breakdown reveals a systemic problem affecting four German brands at once — Mercedes, BMW, Audi and Volkswagen.

Mercedes CEO Ola Källenius told analysts the company is not leaving China and will continue to focus on tech products and localization. CFO Harald Wilhelm confirmed that production of the China-specific GLE model will start in August, which should speed up response to local demand and cut costs.

However, the "build closer to the customer" strategy has yet to pay off, and the company continues to bleed. Wilhelm also acknowledged that the Chinese joint venture will contribute less to profits going forward.

Mercedes is not suffering alone. BMW's China deliveries fell 12.5%, while Audi's global chief blamed "geopolitical and economic challenges" for a 5% sales drop, even as the brand sets records elsewhere — shipping more than 200,000 EVs worldwide, driven mostly by strong demand for the Audi Q6 e-tron.

A far bigger blow came after Beijing scrapped the EV purchase tax rebate. Combined electric vehicle sales across Volkswagen, BMW, Audi, Porsche and Mercedes plunged 55% in the first quarter of 2026.

While German automakers try to stop the bleeding, Chinese rivals are accelerating. Nio projects 40–50% sales growth this year, and Xiaomi's EV division has set a target of 550,000 deliveries — a 34% increase over its previous annual result.