Author | Wang Xiaojuan
Editor | Zhou Zhiyu
A major change is quietly happening in the automotive industry, even the leader of luxury brands is facing the risk of being overturned by newcomers.
This year, BMW has been deeply involved in a price war. Despite officially announcing the end of the price war earlier this year, the terminal selling prices briefly increased, but this favorable situation did not last. It is understood that MINI recently announced price reductions, and according to dealer quotes, the new BMW X1 is priced at around 170,000 yuan, while the i3 price has returned to 180,000 yuan.
The price reduction has not boosted sales. In September, BMW's sales continued to decline, with a 30% year-on-year decrease in China. The middle-class consumers who have been supporting BMW's sales growth are now turning to more cost-effective domestic brands.
As a symbol of luxury cars in the minds of Chinese people, BMW used to make money decently. However, in the era of new energy, many middle-class consumers no longer consider BMW. For the middle class, they prefer domestic new forces in brand selection, are willing to choose models with stronger overall product capabilities, and are willing to pay for technological factors including intelligent driving.
&#34;The decline of luxury cars&#34; and &#34;the decline of joint ventures&#34; are two real changes happening in the Chinese automotive industry. Of course, BMW still has cards to play. Starting next year, its new generation models will be unveiled and put into production.
Before that, it needs to work hard to maintain its market share in China and avoid excessive depletion of brand power. This is destined to be a difficult battle.
<h2>Decline</h2>
Since entering the Chinese market in 1994, BMW has never been as passive as it is now.
After exiting the price war in July, BMW's sales plummeted in August and September. In the third quarter, BMW's global sales fell by 13% year-on-year to 540,882 units; while sales in the Chinese market dropped by 29.8% to 147,691 units.
In the past, BMW was a symbol of status in China, especially for bosses in the business world. Driving a BMW to do business often appeared more confident.
Later on, BMW became a representative of middle-class families. Consumers also liked to talk about BMW's century-old brand story, BMW's sports and handling genes, and the emotion that BMW has always emphasized.
Despite recalls and consumer criticisms of designs like &#34;the best-looking BMW is always the previous generation,&#34; BMW has never lost in sales.
Until 2023, this ability was still maintained. That year, BMW delivered 2.55 million vehicles globally, with the highest sales in the three major markets of China, the United States, and Germany reaching 824,000 units, 395,000 units, and 281,000 units respectively.
However, by 2024, BMW first traded price for volume, then decided to exit the price war in July, trying to return to the days of being sought after. But starting from August, its sales plummeted again, forcing it to return to trading price for volume. It can be seen that faced with the current market situation, even the century-old BMW is finding it difficult to implement effective measures quickly.
BMW's decline lies in the fact that the luxury car market is facing unprecedented challenges. In the past two years, as new forces have equipped models priced around 300,000 yuan with configurations that used to belong to luxury cars, coupled with technological enhancements, they have gained more and more consumer recognition
From Porsche and Maserati to BBA, these once beloved brands by the middle class are all at a crossroads in the Chinese market.
Recently, BMW has adjusted its annual performance targets for 2024: expecting a slight decrease in deliveries; profit margin expected to decrease from 8-10% to 6-7%; Return on Capital Employed (RoCE) expected to decrease from 15-20% to 11-13%.
The decline of luxury brands like BMW in the Chinese market also affects the German automotive industry. According to research data from the German Economic Institute IW, German cars account for 70% to 80% of the high-end car segment, with China being one of the most important export destinations for the German automotive industry.
However, it seems difficult for BMW to reverse its decline in the Chinese market.
In the current Chinese market, every hot new car is ignited by a highly competitive price point. Consumers have become more rational after seeing the changes in the market.
In the high-end market, Aito M9 and Aito S9 have already received many orders, taking a share of the orders that originally belonged to BBA, and even these brands are promoting that many customers were previously BBA users.
Currently, the penetration rate of new energy vehicles has exceeded 50%, and consumption of new energy vehicles is also becoming more concentrated among the top players. Before having competitive electrified products, BMW doesn't have many tricks up its sleeve.
<h2>Transformation</h2>
As a once dominant luxury car brand, BMW also doesn't want to be abandoned and is naturally trying various ways to save itself.
At the recent World Intelligent Connected Vehicles Conference (WICV), BMW announced some new developments in its intelligence field. By 2025, BMW will mass-produce models equipped with &#34;Vehicle-to-Everything&#34; (V2X) technology.
In the process of joining the competition, BMW plans to integrate its expertise in driving dynamics with intelligence.
Dr. Lei Kai, Senior Vice President of R&amp;D at BMW China, said at the World Intelligent Connected Vehicles Conference, &#34;BMW has established the largest R&amp;D and digitalization system outside of Germany in China, fully promoting local cooperation and development of intelligent connected vehicle technology, with the mass application of V2X technology as an example.&#34;
Furthermore, BMW's new generation of electrified models is also accelerating.
At the recent Paris Motor Show, BMW showcased its latest range of electric vehicles, including the BMW NextGen Concept and BMW NextGen X Concept, with over 15 models from both the BMW and MINI brands' product lines participating in the show.
Despite the overall sales decline of BMW, the performance of electric models is still relatively good. In the first 9 months of this year, BMW Group's sales of pure electric vehicles increased by 19.1%, selling a total of 294,054 pure electric vehicles.
BMW is placing more hope in the next two years.
The new generation models that BMW has been promoting will start production globally next year. In China, the first new generation model will officially start production in Shenyang in 2026, and the Chinese R&amp;D team will also start road testing next year.
The new generation models will feature BMW's new electronic and electrical architecture, be powered by cylindrical cell-based batteries, and include the all-new BMW iDrive human-machine interaction system
Whether they can conquer the market remains to be seen based on the specific performance of these cars. After all, Chinese consumers have been re-educated by the rising new forces, and consumer demand has also undergone new changes.
Of course, BMW still has brand advantages.
After losing ground in the mainstream market, these brands are also exploring new paths in niche markets. At this year's Chengdu Auto Show, the all-new BMW M5 made its debut in China, and this year is also a big year for the BMW M series, which is the highest-priced series of products within BMW.
This is also the consensus of luxury brands in response to the changing landscape of the Chinese market, by continuing to focus on the high-end market and maintaining their brand advantages. Recently, Mercedes-Benz also updated the G-Class, with the new Mercedes-Benz all-electric G-Class off-road vehicle priced at 2.17 million yuan for pre-sale.
Although they may falter in the mass market, in these niche markets, the above products can still compete with new energy brands.
Furthermore, as a century-old brand, BMW has ample financial resources to support its transformation strategy. Competition in the automotive industry is long and complex, but with the experience accumulated in the past and the current industry transformation template, BMW still has the opportunity to catch up

BMWYY

- The automotive industry is undergoing significant changes, with luxury brands like BMW facing disruption from emerging competitors.  
- BMW has struggled with a price war, leading to a 29.8% drop in sales in China, as middle-class consumers shift towards more cost-effective domestic brands.  
- Despite these challenges, BMW is focusing on innovation, planning to launch new electric models and enhance its smart technology to regain market share.

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