Premium: German carmakers still lead, but new entrants are on the rise
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Premium: German carmakers still lead, but new entrants are on the rise
- BMW remains the world's leading premium carmaker in 2025. The brand sold 2.17 million vehicles last year, a 1.4% decrease compared to 2024, due to a sharp drop in sales in China (-14.2%), where it faces stiff competition from new Chinese premium brands. Of the 536,163 vehicles sold in China, BMW imported 21,439 units, with the remainder produced domestically.
- Mercedes remains the second largest premium carmaker in 2025. The brand delivered 1.81 million vehicles (excluding commercial vehicles), representing a decrease of 9.6% compared to 2024. This decline is explained by a drop in its sales in China (-19.8%) where the brand sold 472,799 vehicles, of which 33,988 were imported, the rest being produced in China.
- Audi remains the third largest premium carmaker in 2025. Audi delivered 1.62 million vehicles last year (-2.9% compared to 2024) including 617,514 in China (33,726 imported, the rest being produced in China), representing a decrease of 2.7% compared to 2024.
- By comparison, Lexus sold 882,000 vehicles in 2025 and Volvo 710,000 vehicles. Next come the Chinese premium brands and Porsche, which sold fewer than 300,000 cars in 2025.
- The three major German premium brands (BMW, Mercedes, Audi) are facing increasing competition in China from Chinese premium brands that didn't even exist ten years ago. Hongqi and Xiaomi are already approaching 500,000 sales each by 2025 – having thus overtaken the American brand Cadillac – and other Chinese brands are developing rapidly in this category, four of them having overtaken the American brand Lincoln last year.
- The arrival of these Chinese premium brands in Europe could boost their sales, which will further weaken the position of traditional premium brands, such as BMW, Mercedes, Audi, Porsche and Land Rover.
Relative success of the VW ID3, ID4, ID5, ID7 in Europe
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Relative success of the VW ID3, ID4, ID5, ID7 in Europe
- The battery electric vehicle market in Europe (30 countries: EU + UK + Switzerland + Norway) grew by 29% in 2025 compared to 2024, rising from 1,993,102 units in 2024 to 2,579,209 units in 2025. This represents 19.5% of the European market (compared to 15.5% in 2024), significantly exceeding the 18% forecast a few months ago. Strong demand for battery electric cars in the final months of the year boosted the European BEV market during this period.
- Volkswagen's battery electric vehicles benefited relatively from the strong growth in BEV sales in the European market in 2025, with production of the ID.3, ID.4, ID.5, and ID.7 increasing by 43% compared to 2024, reaching 266,000 units versus 186,000 in 2024 (an increase of 80,000 units year-on-year). However, a closer look reveals that the ID.7 accounted for more than half of this growth (an increase of 42,500 units). And these four models together represent less than 2% of the BEV market in Europe in 2025.
- It is clear that the battery electric Volkswagens are not achieving their initial sales targets in Europe, namely 100,000 sales per year for each of these four models, or 400,000 sales for the whole, a quantity which represents half of the annual sales of the Volkswagen Golf during its best years.
- It is possible that the overly geometric design of the models as well as their name are partly responsible for sales not meeting initial targets, as the carmaker has announced that it will return to a more classic design for the brand's future 100% electric models which it will rename with more traditional names, such as ID Polo, ID Cross or ID Golf.
MG and BYD will remain the best-selling Chinese brands in Europe in 2025
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MG and BYD will remain the best-selling Chinese brands in Europe in 2025
- Chinese brands accounted for 795,000 passenger car sales in Europe (30 countries = EU + UK + Switzerland + Norway) in 2025, excluding Volvo, compared to 417,000 in 2024 (a 90% increase), 368,000 in 2023, 200,000 in 2022, 82,000 in 2021, and 36,000 in 2020. They thus represented 6% of the European passenger car market. Including Volvo, sales reached 1,127,000 units in Europe in 2025, representing 8.2% of the European passenger car market.
- Excluding Volvo, the best-selling Chinese brands in Europe last year were MG (304,000 units; +26% compared to 2024), BYD (184,000 units; +278%), Jaecoo (56,000 units; +2286%), Omoda (52,000 units; +260%), Polestar (48,000 units; +56%), and Leapmotor (34,000 units; +2575%). Including Volvo, this Swedish brand under Chinese control remains the most widely distributed, with 326,000 units sold in Europe by 2025.
- Geely group (owner of Polestar and Lynk&Co ) ranks first if Volvo is included, ahead of SAIC (owner of MG), BYD and Chery (owner of Jaecoo and Omoda ).
- The European countries that bought the most Chinese cars in 2025 (excluding Volvo) were the United Kingdom (213,768 units), Italy (130,606 units), Spain (113,244 units), Germany (68,650 units), France (55,876 units) and Poland (49,005 units).
- Including Volvo, the European countries that bought the most Chinese cars in 2025 were the United Kingdom (282,272 units), Italy (144,635 units), Spain (128,227 units), Germany (128,020 units), France (68,943 units) and Poland (64,715 units).
- The market share of Chinese brands in the European BEV market is 11.5% without Volvo and 15.5% with Volvo.
Failure of the VW ID3, ID4, ID6, ID7 in China
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Failure of the VW ID3, ID4, ID6, ID7 in China
- The battery electric vehicle market in China grew by 19% in 2025 compared to 2024, rising from 7,037,467 units in 2024 to 8,395,281 units in 2025, representing 28% of the Chinese market (compared to 25.5% in 2024), which is roughly in line with projections from a few months ago. There was an anticipation of purchases of 100% electric cars during the last months of the year which boosted the Chinese BEV market during this period. Indeed, the Chinese government has decided to increase taxes on electric vehicles and drastically reduce purchase incentives from January 1, 2026.
- Despite this strong growth in BEV sales on the Chinese market in 2025, production of battery electric Volkswagens collapsed last year, to 67,500 units compared to 173,500 in 2024 (which represents a drop of 60%).
- These are the ID.3, ID.4, ID.6, and ID.7 models, which are produced in China (the ID.5 is not produced in China). Together, these four models represent less than 1% of the BEV market in China in 2025.
- It's clear that Volkswagen's battery electric vehicles are struggling in China against models from local brands, and the German carmaker will have to completely overhaul its electric vehicle strategy for the Chinese market. Volkswagen is expected to cease production of these four models in China by 2026 and collaborate with a local carmaker, as Audi recently did with SAIC. It appears that projects with XPeng are already well underway (see VW ID. UNYX 07).
- It is certain that the decline in Volkswagen sales in China, which has been constant for several years, is mainly due to the carmaker's difficulties in establishing itself in the promising BEV market in that country.
The Chinese passenger car market grew by 6.4% in 2025
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The Chinese passenger car market grew by 6.4% in 2025
- The Chinese passenger car (PC) market grew by 6.4% in 2025, to 24,065,181 units compared to 22,607,856 units in 2024. In 2025, this market is represented by 70% Chinese brands and 30% foreign brands, compared to 66% and 34% respectively in 2024.
- Exports grew even more strongly (+21.9%) as they amounted to 6,037,959 units (exceeding the 6 million unit mark for the first time) compared to 4,955,134 units in 2024. China is consolidating its lead over other car-producing countries in terms of exports, with its main markets being Europe and Russia.
- As a result, car production increased by 10.2% in China last year, taking into account deliveries to the Chinese market and those made to foreign markets.
- The growth of the Chinese market, Chinese exports, and Chinese production is expected to continue at a healthy pace in 2026 due to the continued expansion of product offerings among Chinese carmakers, particularly in electric and plug-in hybrid vehicles. BYD's Hungarian plant is expected to begin operations.
- Which carmakers came out on top in 2025 ? BYD delivered 4,545,423 cars in 2025 (+6.9% compared to 2024), ahead of Geely (3,390,481 units; +37.9%) and Chery (2,634,082 units; +6.7%). These three Chinese carmakers outperformed the Volkswagen Group (2,580,865 units; -6.1%) and the GM Group (1,926,279 units; +23.3%) if Baojun and Wuling are included, as GM does.