German luxury automakers are beginning to lose momentum in China as domestic premium brands set more aggressive growth targets in the world’s largest auto market, according to a report by Chinese technology and business outlet 36Kr.
Mercedes-Benz and BMW have recently provided preliminary demand forecasts for 2026 to their Chinese supply chains, projecting annual output of locally produced models at below 500,000 units each, 36Kr reported on Wednesday, citing multiple sources. That would place demand for both brands near levels seen about a decade ago, the report said.
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By contrast, several Chinese premium manufacturers are targeting rapid expansion. Nio is aiming for 40–50% growth in 2026, equivalent to around 460,000 vehicles, while Xiaomi EV is targeting 550,000 units, or 34% year-on-year growth. Huawei-backed Harmony Intelligent Mobility Alliance (HIMA) has set a target of between 1 million and 1.3 million vehicles, implying growth of about 120%, according to the report.
Sales momentum has also shifted at the model level. After a facelift, Nio’s ES8 recorded monthly sales of 22,000 units in December, 36Kr said. HIMA’s Aito M8 and M9 models each exceeded 100,000 units in annual sales, while the Maextro S800, priced from 708,000 yuan ($101,530), delivered more than 4,000 units in December.
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Mercedes-Benz and BMW have both reported consecutive double-digit annual sales declines in China. In 2025, Mercedes-Benz sold 551,900 vehicles in the country, down 19% from a year earlier, while BMW sales fell 12.5% to 625,527 units, according to figures released earlier this month.
Both companies plan to refresh their lineups in an effort to stabilise demand. Mercedes-Benz is scheduled to introduce 15 facelifts and new models in China in 2026, including a long-wheelbase electric GLC and the first locally produced GLE, 36Kr reported. BMW is set to launch its next-generation iX3 along with more than 20 additional models.
However, analysts cited by 36Kr said the competitive environment has shifted as China’s transition to electrified vehicles accelerates. New energy vehicles accounted for more than 50% of total auto sales in China in 2025, putting pressure on traditional luxury brands that have moved more slowly than domestic rivals.
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Mercedes-Benz introduced its all-electric CLA in November 2025, offering a claimed range of up to 866 kilometres and an advanced driver assistance system developed with Chinese technology company Momenta. Combined sales in November and December reached 1,369 units, the report said. BMW’s pure-electric sales in China totalled about 53,000 units in 2025, representing less than 10% of its overall volume.
Pricing pressure has also emerged. The transaction price of BMW’s i3 model reportedly fell from a list price of 353,900 yuan to below 200,000 yuan, according to 36Kr.