BMW and Mercedes quarterly sales drop on weak China By Reuters

By Andrey Sychev and Miranda Murray

BERLIN (Reuters) -Sluggish demand and stiff competitors in China hit third quarter gross sales at BMW (ETR:) and Mercedes, the German luxurious automakers stated on Thursday.

The German automobile sector is dealing with a number of challenges, starting from excessive manufacturing prices and managing the shift to electrical autos to falling demand and rising competitors from China.

The troubles have been illustrated most lately by cost-cutting at Europe’s largest automaker, Volkswagen (ETR:), which is contemplating plant closures in Germany for the primary time.

For the July-September quarter, BMW’s gross sales fell 13%, whereas Mercedes reported a 3% drop.

Demand in China, the world’s largest auto market, is affected by a flagging economic system, whereas overseas carmakers face stiff competitors from native producers providing cheaper fashions, particularly EVs.

BMW’s gross sales in China slumped by a 3rd, whereas Mercedes’ fell by 13%.

Mercedes’ high-end section was hit particularly by decrease shopper discretionary spending in China, affecting its luxurious S-Class lineup, with costs ranging from 451,800 yuan ($63,700) within the nation.

BMW didn’t specify mannequin efficiency in China however stated international gross sales of its Rolls-Royce (OTC:) limousines fell 16%, whereas its MINI model suffered a 25% drop.

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Mercedes additionally famous a subdued international battery electrical car (BEV) market, reporting a 31% BEV gross sales drop. For BMW, BEV gross sales rose 10% within the quarter.

The European Union has lately imposed hefty tariffs on Chinese language-made EVs, saying they profit from unfair state subsidies. Beijing denies this and has threatened retaliation, whereas German automakers, which make a few third of their income in China, have voiced concern and referred to as for extra talks.

China is contemplating a hike in tariffs on large-engine car imports, which might hit German producers particularly. German exports of vehicles with 2.5-litre engines or bigger to China reached $1.2 billion final yr.

European customers are reluctant to purchase costlier EVs, partly due to patchy charging infrastructure.

Shares in BMW and Mercedes have been flat after the gross sales knowledge.

The businesses minimize their annual forecasts in September citing a sluggish Chinese language market, whereas BMW additionally talked about issues with a braking system provided by Continental.

Up to now this yr, BMW and Mercedes shares are down 23% and 9% respectively, whereas the pan-European automotive index is down 13%.

($1 = 7.0770 renminbi)