How Do European Manufacturers Combat Chinese Competition?

If you want to sell cars in the Chinese market today, you have to grit your teeth and shed a few tears. Namely, the discounts are such that they erase almost the entire margin, and some manufacturers sell vehicles with negative margins. Even Mercedes-Benz has been forced to cut back dramatically to stay competitive with local marques.

Sales are falling, and that trend needs to be slowed down. Several Mercedes-Benz models will be cheaper by around 10%, Caixin reports.

The Mercedes-Benz C-Class, for example, is cheaper by approximately 4,200 euros. The GLC also gets a new, reduced price. Today, that SUV is cheaper in China by 7,200 euros. Chinese competitors are delivering cars with new technology and lowering prices. Traditional automakers are being forced into steep discounts to keep up.

Mercedes is not the only one. The Germans suffer serious blows in China. Porsche sales were cut in half in 2022. It has gone so far that Porsche is preparing to close 30 percent of its showrooms in China. And BMW shockingly reduces catalogue prices by up to 37,000 euros (for the most expensive models) to stay afloat. At the same time, Mercedes dealers say they are struggling with heavy losses and full inventories and are now reducing their list prices.

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