German Carmakers Report Sales Drop and Diverging EV Fortunes — Update

By Dominic Chopping

German carmakers struggled in China and suffered a drop in vehicle sales in the second quarter, but experienced diverging fortunes in the hotly contested electric-vehicle market.

Mercedes-Benz, BMW and Volkswagen all posted declines in overall vehicle sales and saw demand drop in China compared with the same quarter last year. Mercedes-Benz also reported a 25% slump in battery-electric car sales, but Volkswagen managed to eke out a 0.1% sales increase while BMW's EV sales surged over 22%.

Competition in the electric-vehicle market has intensified and car makers have been cutting prices to try and gain market share, particularly as production of new cheaper models from Chinese manufacturers have hit the market and begun to gain traction in Europe.

The European Union recently placed additional tariffs on Chinese-made EVs, following a similar move by the U.S. China has yet to respond and executives at European brands fear an escalating trade war could hurt Europe's industry long-term.

Mercedes-Benz said overall sales of its cars fell 4% on year in the second quarter, with a slump in customer appetite for battery-electric vehicles in some of its biggest markets.

The German luxury-car maker said sales in China fell 6%.

Battery-electric vehicle adoption eased in important Mercedes-Benz markets as the company focused on growth amid a tough market that has seen manufacturers offer their cars at heavy discounts, it said.

Volkswagen noted that some manufacturers are offering price discounts of up to 50% in China, with the majority even launching new models with high discounts.

"The Volkswagen Group has always made it clear that profitability is the company's top priority," the company said. "We rely on a sustainable business model and do not buy market share at the expense of profitability."

Volkswagen overall car deliveries fell 3.8% on the year while deliveries in China fell 19%.

German rival BMW reported a 1.3% drop in overall sales and sales in China fell 4.7%.

Despite sluggish sales in the quarter all three manufacturers expect sales to pick up in the remainder of the year thanks to new model launches.

Mercedes-Benz expects passenger car sales to further improve in the second half, while Volkswagen backed guidance for a slight increase in global deliveries this year. BMW said it is looking forward to the second half of 2024 with confidence.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

July 10, 2024 06:58 ET (10:58 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.