German luxury car manufacturers BMW, Mercedes-Benz, and Audi are withdrawing from the aggressive price war in the Chinese market, significantly reducing car-buying incentives to alleviate dealer losses.
BMW has raised prices across its entire lineup by RMB 30,000 to RMB 50,000 ($4,140 to $6,900), according to a report by Securities Times. This move follows severe dealer losses caused by previous sharp price cuts. In early June, BMW offered significant discounts on battery electric vehicles (BEVs), such as the i3 and i5, with the i3’s price dropping to around RMB 170,000 in some locations.
A BMW dealership salesperson in Beijing confirmed the price hikes, attributing the previous discounts to intense market competition. BMW plans to focus on business quality and dealer stability in the second half of the year.
Under the impact of the price war, BMW, Mercedes-Benz, and Audi are projected to lose about 500,000 units of sales in China in 2024. BMW’s discount strategy did not boost sales and risked diluting the brand’s value, according to industry sources.
Mercedes-Benz and Audi are also scaling back discounts. Mercedes-Benz is already selling several models at a loss, with the C-Class losing RMB 70,000 per unit. Prices are expected to rise, although no official announcement has been made. Audi has implemented small price increases on popular models like the Q5L, A6L, and A4L, with the potential for further adjustments.
The exit from the price war represents a strategic shift for these traditional tier-1 luxury carmakers as they aim to preserve brand value and support dealer sustainability in the highly competitive Chinese auto market.
