BMW and Mercedes-Benz Brace for Weak 2026 China Demand as Local EV Brands Surge

Mercedes-Benz and BMW are bracing for a challenging 2026 in China, projecting demand levels not seen in nearly a decade as domestic EV brands continue to gain momentum. New forecasts shared with local suppliers suggest the German luxury leaders are preparing for slower sales even as China’s premium market rapidly electrifies.

German luxury brands dial back China expectations

According to a report by 36Kr, both Mercedes-Benz and BMW have provided preliminary 2026 demand guidance to their Chinese supply chains that points to annual sales of fewer than 500,000 locally produced vehicles each. If realized, that would place both brands close to their China sales volumes from roughly ten years ago.

The cautious outlook follows a difficult 2025. Mercedes-Benz sold 551,900 vehicles in China last year, down 19% year over year, while BMW delivered 625,527 units, a 12.5% decline. Both brands have now posted consecutive annual drops of more than 10%, underscoring the pressure they face in the world’s largest auto market, according to CNEV Post.

The slowdown comes despite aggressive product plans. Mercedes-Benz is preparing to launch 15 facelifts and new models in China in 2026, including a long-wheelbase electric GLC and the first locally built GLE. BMW, meanwhile, plans to introduce its next-generation iX3 along with more than 20 additional models.

Domestic EV brands set aggressive growth targets

While German automakers turn cautious, Chinese premium brands are signaling confidence. Nio is targeting 40–50% sales growth in 2026, implying volumes of around 460,000 units. Xiaomi’s EV unit is aiming for roughly 550,000 vehicles, while Huawei-backed Aito under the Harmony Intelligent Mobility Alliance has set a target of 1–1.3 million units, more than doubling year-over-year sales.

Recent results highlight that momentum. Nio’s refreshed ES8 reached monthly sales of 22,000 units in December, while Aito’s M8 and M9 each surpassed 100,000 units annually. Even ultra-premium offerings are finding buyers, with the Maextro S800, priced above RMB 700,000, delivering over 4,000 units in a single month.

China’s new energy vehicle penetration exceeded 50% in 2025, and domestic brands are widely seen as moving faster on electrification, software, and pricing. Although Mercedes-Benz and BMW are rolling out new EVs, including electric flagships with long range and advanced driver assistance, their EVs still account for a relatively small share of total China sales.

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