Auto Industry Profit Slump Drives Chinese Export Surge and German Brand Losses

Chinese car manufacturers BYD and Geely are confronting a projected 10% decline in new‑car sales in China as domestic demand weakens and government subsidies are cut by up to one‑third. To offset falling sales and excess inventory, they are accelerating exports, with BYD preparing to launch the Ti7 model in Vietnam and other Chinese brands seeking new markets abroad.

At the same time, Germany’s premium car makers are seeing a sharp erosion of profitability. Mercedes‑Benz reported an adjusted EBIT margin of 1.9% in the first half of the year, down from 14.3% three years earlier, while BMW’s margin fell to 3.6% from 10.6% in 2023. Both figures lag behind Volkswagen’s 4.1% and are lower than rivals such as GM and Hyundai‑Kia. The downturn reflects broader challenges in the global automotive sector, including reduced demand in key markets like China and tighter profit pressures for high‑end manufacturers.