Crystal Kim
3 min read
European luxury carmakers are shrinking in China’s rearview mirror as shifting dynamics in the world’s largest auto market threaten to leave them behind.
Case in point — a little-known, home-grown carmaker in China called Seres Group lapped BMW and Mercedes in car sales last year, enticing domestic customers with souped-up cockpits developed in partnership with the country’s telecom giant Huawei Technologies.
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Seres Group’s status as a luxury contender was cemented with its electric-vehicle brand AITO. Deliveries of its M9 SUV in 2024 totaled 151,000, surpassing BMW and Mercedes in the 500,000 yuan-and-up category (~$69,000), per a Bloomberg article citing data from Shanghai-based auto consultant ThinkerCar.
AITO, an acronym for “Adding Intelligence to Auto,” is something of a bellwether for shifting consumer preferences in China, where electrification and “smartification” are in the driver’s seat, according to McKinsey’s 2024 China Auto Consumer Insights report. Its models feature luxury appointments, including roomy interiors and intelligent driving assistance, but come at affordable prices and with a domestic brand name. Stealth wealth has become more culturally palatable given China’s macroeconomic challenges lately and President Xi Jinping’s distaste for flashing cash.
Legacy luxury automakers have acknowledged the environment while catering to customers there:
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“In all major sales regions outside of China, we increased our sales compared to the same period of last year,” Oliver Zipse, chief of BMW, said in an earnings call in early May. “Thanks to our strong performance in other markets, we were able to nearly offset the persistent challenges in the Chinese market.”
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Ola Källenius, chief of Mercedes-Benz, said the company is “ever strengthening its commitment to China” in a presentation in Shanghai late last month of the Vision V, a luxury van he called a “private lounge on wheels.” The German carmaker’s first-quarter sales declined slightly year-over-year, primarily due to weakness in China.
Per ThinkerCar data, BMW and Mercedes vehicle deliveries picked up in January and February this year, overtaking AITO.
EV Traction. China’s carmaking prowess, particularly in EVs, also shows up in other places, like Europe. BYD, the Chinese EV giant that has enticed investment from Warren Buffett, sold more of its cars in Europe than Tesla for the first time last month, according to London-based auto intelligence firm Jato Dynamics. However, BYD has hit roadblocks at home: Its shares plunged 8% on Monday as markets reacted to price cuts designed to clear inventory amid waning demand. Fears of a potential price war also dragged down other Chinese automakers, spurring slides of more than 5% for Li Auto, Great Wall Motor, and Geelo.
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