German premium automakers’ core business erodes as China combustion‑engine dependence hurts profits
Executive summary: German premium car makers (BMW, Mercedes‑Benz) are earning less than volume manufacturers due to reliance on combustion‑engine models in China, per Handelsblatt analysis. Highlights a structural weakness in core profitability amid accelerating EV transition and competitive pressure from Asian rivals.
Who is involved: BMW AG, Mercedes‑Benz Group AG, Hyundai Motor Co., Chinese auto market, volume manufacturers.
Likely next: Expect continued margin pressure, accelerated EV investment, and possible strategic shifts or cost‑reduction programs in H2 2026.
BMW and Mercedes‑Benz are earning less than volume manufacturers in China because their line‑up still leans heavily on internal‑combustion engines, according to a Handelsblatt analysis. The profit gap underscores a structural challenge for the premium segment as the market shifts toward electric vehicles and Asian competitors gain share. While a separate Ifo survey shows a tentative lift in sector sentiment, the underlying earnings pressure remains evident.
Timeline
- — Autoindustrie: „Schockierendes Bild der Branche“: Kerngeschäft der deutschen Premiumhersteller bricht ein (Handelsblatt)
- — Autoindustrie: Profitkrise der Premiumhersteller: Hyundai zieht an BMW und Mercedes vorbei (Handelsblatt)
Analysis — what this means
Likely next events
- BMW to report Q3 2026 results on 15 Sep 2026
- Mercedes-Benz to unveil new EQE SUV platform in Oct 2026
- China to raise NEV credit thresholds effective 1 Sep 2026
Sectors affected
- German premium automotive
- Chinese automotive market
- EV battery supply chain
Regulatory implications
- EU Fleet CO2 limit tightening to 95 g/km by 2025 pushes OEMs toward electrification
- China’s NEV dual‑credit scheme extension to 2027 increases cost penalties for ICE‑heavy fleets
Historical parallels
- 2008‑09 financial crisis cut German premium car profits by ~30% as demand collapsed
- 2020 COVID‑19 lockdowns caused a temporary 20% sales dip for luxury vehicles in Europe and China
Key entities
Sources
- Autoindustrie: „Schockierendes Bild der Branche“: Kerngeschäft der deutschen Premiumhersteller bricht ein — Handelsblatt
- Autoindustrie: Profitkrise der Premiumhersteller: Hyundai zieht an BMW und Mercedes vorbei — Handelsblatt
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