In early 2026, China’s luxury passenger car market reached a critical inflexion point as traditional European premium brands collectively adjusted pricing strategies amid continued sales erosion in the world’s largest auto market, according to 36kr.

Data from the 2025 calendar year showed that cumulative China sales for BMW, Mercedes‑Benz, and Audi contracted significantly year‑on‑year. BMW’s China deliveries fell approximately 12.5 %, Mercedes‑Benz dropped around 19 %, and Audi’s sales declined about 5 % versus 2024 figures. Combined, the three brands sold roughly 260,000 fewer vehicles in China in 2025, according to historical reports, contributing to a broader contraction in the luxury segment.

Historically, China accounted for a substantial portion of the German trio’s global volume and profit, making it a key strategic region. The 2025 downturn reduced this leverage and shifted focus toward local market responsiveness.

Price adjustments signal strategic pivot

In response to softer demand and intensifying competition from domestic premium EVs, BMW China revised recommended retail prices for more than 30 models, effective January 1, 2026. Many vehicles saw cuts exceeding 10%, with select units reduced by more than 300,000 yuan (43,000 USD). The BMW iX1 eDrive25L’s price fell from 299,900 yuan (43,460 USD) to 228,000 yuan (33,000 USD).

Mercedes‑Benz followed in early February 2026, adjusting prices on core models, including the C‑Class and GLC, by roughly 33,000–69,000 yuan (4,740–9,770 USD). Industry commentary frames these measures as dealer-support and competitiveness strategies rather than as an explicit “price war.”

Automotive media have interpreted these moves, particularly BMW’s deep and broad cuts, as a pivot from premium pricing toward greater value accessibility, aimed at addressing slowing sales and rising domestic competition.

Market forces and competitive landscape

Pricing adjustments are occurring amid accelerated NEV adoption and the rise of Chinese premium brands capturing mid‑to‑high‑end segments with advanced connectivity and EV capabilities. Legacy European brands have been slower to monetise these consumer priorities. Early 2026 passenger-car sales weakness across China further underscores the growing importance of pricing competitiveness for the German trio.

Strategic outlook

Externally, regulatory guidance aims to stabilise industry value creation and moderate discounting. For the German trio, 2026 is shaping up as a decisive period. Success depends on balancing localised pricing, electrification, the integration of digital technologies, and strategic repositioning. Outcomes in China are expected to influence global brand performance and market share trajectories.

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