Some of Europe’s biggest motoring brands are struggling to meet sales expectations as consumers ditch mainstream brands for cheaper Chinese vehicles. Top German brand BMW has been forced to change its outlook for the 2025 financial year after admitting demand for models in China was lower than they had hoped.
Alongside the impact of US tariffs, BMW said it needs to “reduce volume expectations for the Chinese market” over the fourth quarter in a blow to investors. The German marque explained that its earnings before interest and taxes (EBIT) is now expected to hit between 5% and 6%. This is down from BMW’s previous expectations of anywhere between 5% to 7%.
Meanwhile, the car firm’s return on capital employed (RoCE) has been cut from 9–13% to 8–10%.
In a statement, BMW said: “Today, the Board of Management of BMW AG has changed the outlook for the 2025 financial year. Whereas the company delivered volume growth year to date September in the European and Americas regions, however, the targeted volume growth in China remained below expectations.
“On this basis, the BMW Group decided to reduce volume expectations for the Chinese market in the fourth quarter. Additionally, the impact of a significant reduction of commissions from local Chinese banks in connection with the brokering of financial and insurance products to end customers requires financial support to strengthen dealer profitability.”
BMW is not the only Western manufacturer to be losing a battle to compete with new upstart Chinese brands winning over consumers.
Brands such as BYD and Xiaomi now offer top-of-the-range electric models at low upfront costs, turning the heads of potential buyers.
Mercedes-Benz admitted Chinese sales had fallen by 27% in the third quarter. It means the German marque is now selling at its lowest level in China for almost a decade in a major blow.
Porsche is also in trouble in China, with sales also down across the first half of 2025. The iconic brand known for its gleaming sportscars reported a 28% decline in sales across mainland China. Although many of these brands still enjoy dominance in the European market, China could be about to take control.
Data from JATO showed that the market share of Chinese car brands has almost doubled in 2025. Chinese firms now enjoy a market share of 5.1% across Europe with volumes increasing by 91% so far this year.