Overview
- Sales for BMW, Mercedes and Volkswagen collapsed in China in the first half of 2026, with quarter‑to‑quarter falls that left core volumes and profits under acute pressure.
- Volkswagen has already closed or sold five China plants, cutting about one million units of capacity and planning a further 0.5 million reduction to align output with weaker demand.
- BMW has cut its core operating margin guidance to roughly 1–3 percent and is weighing withdrawing small and compact models including Mini from China or shifting their development to Chinese partners.
- Chinese EV makers are racing overseas as exports surge, with Xpeng and BYD expanding into Europe and Xpeng setting ambitious targets outside China while Volkswagen deepens a minority stake and product cooperation with Xpeng.
- The shakeup is changing where cars are made and who makes them, prompting new investments in Hungary, workplace disputes and calls for German industrial policy on batteries and charging to protect jobs and competitiveness.