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Author | Chai Xuchen
Editor | Wang Xiaojuan, Zhou Zhiyu
As 2024 comes to a close, Mercedes-Benz and BMW are vying for the title of the best-selling luxury car brand in China.
With Mercedes-Benz's commercial vehicles and BMW's MINI sub-brand, both have their &#34;advantageous items,&#34; with total sales in China exceeding 700,000 units.
The push by Mercedes-Benz to claim the sales crown may be an attempt to mask its disappointments amid significant market changes.
Over the past year, China remains Mercedes-Benz's largest single market, accounting for one-third of its share, but it has seen a year-on-year decline of 7%. This not only erased growth in the North American market but also led to a 3% year-on-year drop in Mercedes-Benz's global total sales, ultimately falling below 2 million units.
Elgen Luma, chairman of the Mercedes-Benz employee council, clearly stated that 2 million is a necessary condition and bottom line to ensure the efficient operation of German factories. This means that Mercedes-Benz's stronghold will face challenges ahead.
The domestic high-end market in 2024 is bustling, with newcomers like Xiaomi, Li Auto, and Aito repeatedly making headlines, causing anxiety among the &#34;old money&#34; represented by Mercedes-Benz, as they oscillate between price cuts and increases, and weigh the balance between electric and gasoline vehicles. Amid the tide of transformation, Mercedes-Benz's significant adjustments reveal a deep-seated sense of confusion.
Whether BBA admits it or not, China's luxury car market has undergone a major transformation, with shifts in the definition and discourse power of the high-end market unfolding alongside the trend of &#34;affordable alternatives.&#34; Their former profit fortress and million-dollar luxury &#34;comfort zone&#34; are being fiercely attacked by the new generation.
At this critical juncture of changing dynamics, &#34;the Mercedes-Benzes&#34; must accelerate their moves.
<h2>Disappointment</h2>
Caught in the tide of market changes, Mercedes-Benz's transformation journey seems to be less smooth than expected.
2 million in sales is a red line for capital markets observing Mercedes-Benz. The figures for 2023 and 2022 were 2.044 million and 2.041 million units, respectively, but in 2024, Mercedes-Benz faltered, ultimately recording a year-on-year decline of 3% with 1.9834 million units.
Water can carry a boat and also capsize it; the rapid growth of the Chinese market in previous years, which brought Mercedes-Benz to the pinnacle of mainstream luxury cars, is now affecting the fluctuations of the entire Mercedes-Benz base.
In 2024, Mercedes-Benz sold 51,400 fewer units in China year-on-year, becoming the single market with the largest decline. During this period, only North America stood out with positive growth, creating an increase of 27,000 units for the year, but the total market size is less than half of China's, making it difficult to fill the gap in the short term.
In fact, Mercedes-Benz has been &#34;painstakingly managing&#34; its scale in China, having started a price war since June last year. In the second half of the year, Mercedes-Benz launched an even more aggressive offensive, with almost all models from the entry-level A-Class to the top-spec S-Class, and from sedans to SUVs, joining the ranks of discounts, with the highest discount reaching 15%.
According to data from the Auto Home Research Institute, in December 2024, the average price per vehicle for Mercedes-Benz was 407,500 yuan, a year-on-year decline of 9.4%
The price strategy has helped Mercedes-Benz maintain its scale in the mid-range model segment. According to data from the Gaogong Intelligent Automobile Research Institute, in the first 11 months of last year, Mercedes-Benz's market share in the passenger car market above 300,000 yuan in China slightly increased from 14.38% in the same period last year to 14.92%; however, in the market above 400,000 yuan, it dropped from 21.75% the previous year to 20.58%.
This indicates that Mercedes-Benz is &#34;descending,&#34; which brings more uncertainty to the &#34;focus on high-end&#34; plan set by the chairman of the Mercedes-Benz Group, Ola Källenius, two and a half years ago. Mercedes-Benz has had to adjust its direction and announced a shift in product focus to the entry-level market.
It seems that Mercedes-Benz is proactively adjusting its stance based on market trends, but the once strategically stable Mercedes-Benz that guided the industry is no longer present. The reason for Mercedes-Benz's confusion may lie in the fact that its substantial investment in electric vehicles has not been able to replicate the appeal of gasoline vehicles.
In 2024, Mercedes-Benz's global electric vehicle sales are projected to be 185,000 units, a significant decrease of 23%, accounting for less than 10% of total sales. In the Chinese market, although Mercedes-Benz's electric vehicle lineup continues to expand, it has not made a splash, and there has been no public disclosure of domestic electric vehicle sales. According to data from the Gaogong Intelligent Automobile Research Institute, in the first 11 months of last year, the delivery volume of Mercedes-Benz's new energy models in China was only 28,200 units, a nearly 40% year-on-year decline.
It is worth noting that in the first three quarters of 2024, Mercedes-Benz has invested over 30 billion yuan in research and development, nearly double the total R&amp;D expenditure of leading domestic new power brands Li Auto and Nio during the same period, which has further lowered Mercedes-Benz's overall profit. Last year, the Mercedes-Benz Group twice lowered its annual profit margin target, reducing the double-digit guidance to 7.5%-8.5%.
For over a decade, Mercedes-Benz had not experienced significant &#34;side effects&#34; from product transitions, but why has it struggled to compete with emerging brands like Nio, Aito, XPeng, and Xiaomi in the era of intelligent electric vehicles?
Because the high-end market in China has changed dramatically.
<h2>Change</h2>
In April last year, during his visit to China, Ola Källenius had an important itinerary—test-driving domestic electric vehicles, including Xiaomi SU7, Yangwang U8, and ZEEKR 007. After experiencing them, the German executives remarked that it was &#34;an eye-opener.&#34;
The rapid changes in the Chinese market have left Mercedes-Benz somewhat at a loss.
As one of the first luxury car manufacturers to transition to new energy, Mercedes-Benz proposed the &#34;electric first&#34; strategy as early as 2020. At that time, Mercedes-Benz launched its first pure electric vehicle, the EQC, in the C-class market, which it was most confident about in China. However, with a starting price of nearly 500,000 yuan, the EQC failed to replicate the sales myth of gasoline vehicles, with monthly sales never exceeding a thousand units.
Subsequently, Mercedes-Benz enhanced its intelligent configuration and brought two high-end pure electric models, the EQE and EQS, to China, with starting prices of 478,000 and 1,079,600 yuan, respectively. However, ambitious Mercedes-Benz was once again doused with cold water by the market; even with a price reduction of 200,000 yuan, the monthly sales of the EQE still linger around three digits.
Currently, Mercedes-Benz has launched a series of pure electric products including EQA, EQB, EQC, EQE, EQS, EQS SUV, and EQE SUV, but none have become the mainstay for Mercedes-Benz. This is because consumer perceptions have fundamentally changed.
At present, new forces such as Xiaomi, Aito, Nio, and Yangwang have already occupied the mid-to-high-end market of 200,000 to 300,000 yuan, pushing the ceiling for domestic cars to the million-yuan level. However, they do not aim to compete directly with BBA products but rather seek to provide alternatives to high-end luxury models priced in the millions and tens of millions
The underlying logic of &#34;overtaking&#34; is to equalize the once lofty luxury configurations, designs, and services to mainstream models, naturally demystifying the luxury standards built by BBA. The most successful among them is Aito M9, which has &#34;harvested&#34; 200,000 orders in a year, capturing one-third of the domestic market share for models priced over 500,000 yuan.
This has greatly boosted the confidence of domestic brands, leading to more challengers emerging one after another. The &#34;competition&#34; among new forces in terms of configuration and price aligns with the current economic trends. Nowadays, the car purchase budget of consumers in the Chinese market is further declining.
According to data from the High-tech Automotive Research Institute, from January to October 2024, the delivery volume of passenger cars priced over 300,000 yuan in the Chinese market has turned from a year-on-year growth of 27% last year to a decline of 7.3%. The China Passenger Car Association also pointed out that the share of models priced over 400,000 yuan has dropped from 5% in 2023 to 3% at the end of last year, with a more severe decline in traditional luxury cars.
Pulling BBA down from its pedestal has become a key means for the new generation to capture incremental growth, and consumers are clearly unable to resist such &#34;temptation.&#34; The mainstream users' perception of high-end luxury has been refreshed by domestic brands. This also means that the luxury brand faith established by BBA has already been shaken.
At this time, how to enhance product strength and whether to launch models with higher cost-performance ratios have become the hurdles that Mercedes must overcome in China.
Having learned from past lessons, Mercedes is preparing to make a comeback. This year's new entry-level sedan CLA is the spearhead for Mercedes to revitalize its sales, especially in the competition for market share in the new energy sector.
It is understood that Mercedes has given the debut of the MMA compact pure electric vehicle platform to the new CLA, introducing a new electric drive system and 800V architecture, and it will be equipped with laser radar to provide urban NOA functionality; at the same time, Mercedes' self-developed vehicle operating system MB.OS will also be mass-produced for the first time.
This indicates that Mercedes will &#34;shed&#34; the historical burden of the EQ series and launch a counterattack in the pure electric market against new forces. In the coming year, Mercedes plans to launch more than ten new products, and the success or failure of this &#34;first shot&#34; with the CLA will affect Mercedes' morale.
For Mercedes China, 2025 will become an important turning point. To this end, Mercedes has begun a &#34;major reshuffle&#34; of its senior management in Greater China. Tang Shikai, who is responsible for Mercedes' Greater China business, as well as Coleson from the Human Resources Department and Bai Yunge, who is in charge of integrity operations, will retire after their contracts expire; Tong Oufu, Gaisen, and Shi Kun will take over their positions, becoming new members of the board of directors.
The introduction of new products and new management has shown the market Mercedes' urgency to regain its former glory. This will also be one of its few opportunities to win back Chinese consumers

MBGYY

- In 2024, Mercedes-Benz and BMW competed for the title of top luxury car seller in China, with both achieving over 700,000 units sold.  
- Despite being the largest market for Mercedes, sales declined by 7%, leading to a global drop of 3% and raising concerns about maintaining efficient operations in Germany.  
- As new competitors emerge, Mercedes is adjusting its strategy, focusing on entry-level models and preparing to launch new electric vehicles to regain market share and consumer confidence.

Mercedes-Benz does not want to miss an era