The “Fire-Sale” BMW: Twilight in Bavaria

“Drive a BMW, ride in a Mercedes.”

Chinese consumers believed this for twenty years. For two decades, the blue-and-white roundel was the seal of approval for China’s middle class climbing upward, hard currency in the eyes of a mother-in-law, and the shortest proof that “this generation is doing all right.”

In the first half of 2026, that seal cracked.

According to BMW Group’s H1 sales, it delivered 261,800 vehicles in China, down 20.4% year on year. China thus lost its position as BMW’s largest single market globally for the first time since 2013, falling behind Europe; its share of BMW’s global sales also fell from a peak of 33.5% to about 22.6%. Over the same period, Europe grew 5.4%, Germany 10.2%, the Americas 3%, and the United States 3.9%.

BMW grew against the trend in Europe and the United States, but collapsed in China alone.

It is not that Chinese people can no longer afford a BMW. On the contrary, precisely because they know too well what it is worth, Chinese consumers remained calm and unmoved while BMW was selling at fire-sale prices.

This is not an emotional boycott. It is Chinese consumers reclassifying BMW from a must-buy to one option among many. When a stock is removed from the core asset pool, reducing the holding never needs a reason—only a loss of belief in the story.

01 The sales plunge: 200,000 vehicles lost in two years

The numbers need to be broken down.

In H1 2026, BMW Group delivered 261,800 vehicles in China, down 20.4% year on year. In Q2 alone, deliveries were just 117,800, down 30.2% year on year. The decline is not narrowing; it is widening. On the global books, BMW Group delivered about 1,156,700 vehicles in H1, down about 4.2% year on year, a reduction of about 50,000 vehicles. Unfortunately, the 20,000 vehicles of growth in Europe and the United States could not fill the gap left by China.

Under China Passenger Car Association data, BMW Brilliance Automotive wholesaled 29,442 vehicles in August, down 33.5% year on year and 8.19% month on month. It still ranked around seventh among joint-venture automakers, but had fallen out of the top ten in overall market share. The BMW brand, including BMW Brilliance and imported BMWs, retailed 30,675 vehicles that month, down about 6.5% from July. By comparison, national passenger vehicle retail sales were 1.541 million, down 23.6% year on year but up 5.5% month on month. While the overall market was recovering sequentially, BMW was still sliding against the trend.

The model mix is even more telling. In August, the combined sales of the 3 Series, 5 Series, and X3—once BMW’s volume pillars—fell below 22,000. The combined sales of the all-electric i3, iX1, and i5 were below 1,500. With domestically produced BEV models successively discontinued, BMW’s new-energy product line in China has effectively been “zeroed out,” and it will have to wait until Q4 deliveries of the Neue Klasse iX3 to begin filling the gap.

Put the stalling of core models together with the zeroing-out of BEVs, and what BMW is experiencing in China is not an ordinary cyclical downturn but a two-way collapse in product structure: the combustion-engine base is retreating, and the electric backfill has been cut off. Both ends are empty—that is the product-side trigger for the sales avalanche.

Looking at the numbers alone may not hurt enough. Stretch the timeline: in 2023, BMW sold 825,000 vehicles in China, its peak. In 2025, only 625,500, a second consecutive annual decline—200,000 vehicles gone in two years.

BMW’s own base is also loosening. CPCA data show that BMW 5 Series sales in H1 were 48,000, down 19.1% year on year. This mid-to-large luxury sedan, which once routinely sold more than 10,000 units a month, can no longer hold the 10,000-unit monthly line. The traditional luxury base is being redefined by urban assisted driving, smart cockpits, and high-voltage fast charging—and that is not something price cuts can win back.

The fall of the 5 Series is the most telling. It is not a marginal volume model; it is BMW’s flagship and cash cow, the default choice for business occasions. If even the 5 Series cannot hold its average monthly 10,000-unit line, the ebb is not starting at the edges. When a car’s brand halo can no longer cover the gap in product strength, the first to collapse is precisely the model that most depends on that halo.

New BMW Group Chairman of the Board of Management Milan Nedeljković explained on the H1 earnings call that BMW’s 20.4% decline in China almost overlapped with the overall market’s 20.2% decline, so “its market position has not deteriorated significantly.” Statistically true, but it dodges the point: Q2 group revenue fell 7.9% year on year, significantly faster than the 4.9% decline in global deliveries. BMW’s Q2 report showed its automotive segment EBIT margin had fallen to 2.3%, with changes in volume, price, and product mix dragging down operating profit by about €1.8 billion. Its share has not fallen much, but the business is already unhealthy.

His predecessor, Oliver Zipse, was far more honest before stepping down: “Local manufacturers are increasingly flooding the market and trying to grab share. Competition is extremely fierce.” In an interview at the 2026 Beijing Auto Show, he also said plainly that “the current overheated state of China’s auto market is worrying…” A CEO who called China a “second home” left behind, not a solution, but a casual expression of “concern.”

Who is glossing over and who is owning up is clear at a glance.

One is the outgoing leader admitting “worrying”; the other is the incoming leader glossing it over with “market position has not deteriorated.” The more the top leadership changes, the smoother the rhetoric and the thinner the financials. BMW’s communications history is a history of retreat, using rhetoric to fight reality.

02 The fire-sale of “belief”: a ¥350,000 i3, taken for ¥188,000

Sales could not be defended, and price collapsed first.

In early 2026, BMW China cut official guide prices on more than 30 models, generally by more than 10%, with some models seeing official cuts of more than ¥300,000. The terminal market was even more brutal: the gasoline X1 had a terminal discount of ¥70,000; the all-electric i3 had a discount of nearly ¥160,000, with on-road prices at one point falling below ¥188,000; the flagship i7 had a maximum cut of about ¥300,000; and the starting price of the 5 Series fell into the ¥280,000 range. Fire-sale models lost ¥70,000 per unit sold. Dealers were clearing inventory at a loss; BMW was defending volume at a loss.

A car cut by ¥300,000—what does that mean? It is equivalent to hacking the price of a fully loaded Model 3（参数丨图片） off the back of a BMW owner.

BMW thought it was trading price for volume. In fact, it was doing three things: first, tearing down with its own hands the brand premium it had built over a century; second, telling everyone holding cash and waiting to buy, “Wait a little longer, it will fall further”; third, forcing dealers into a meat grinder of mutually undercutting prices.

In the end, frequent official price cuts are not a tactical move but a strategic admission: in the Chinese market, BMW no longer has non-price competitiveness. The only card it can play is “a cheaper BMW,” and every time it plays that card, the next hand is thinner.

The result? Prices went down, but sales did not come back. H1 fell 20.4%, and the Q2 decline widened to 30.2%. Once the expectation of “new cars must be discounted; hold cash and wait” takes hold, it becomes a vicious cycle.

Damage to brand premium has a peculiar trait: it takes a century to build and only one quarter to destroy. When the news spread that the i3 was selling for ¥188,000, the psychological anchor for all potential BMW buyers was permanently lowered. Even if the product improves and production recovers, consumers will no longer accept it at the old price. Price cuts are a one-way road down; every step makes turning back more expensive.

And dealers were the first to buckle.

In January 2026, Chengdu Baoyuanhang BMW 4S store exited the authorized network; on June 30, stores in Guangzhou, Pingyang, Hefei, and Shenzhen terminated authorization on the same day; multiple Shenzhen Futian Baoyuanhang-affiliated stores withdrew en masse. Among them, Shenzhen Baoyuanhang, which had served Shenzhen for more than 16 years and was once called the South China sales champion, had all its assets seized by the Futian District Court on March 13. Prepaid maintenance packages and deposits from a large number of owners were left unaccounted for.

According to data from market research firm LandRoads, from Q2 2025 to Q2 2026, BMW’s dealer network in China shrank from 637 to 549 outlets, a net reduction of 88 in one year. BMW dealers lost an average of ¥20,000–30,000 per new car sold, and 51% of dealers were loss-making; the absolute reduction of 88 stores reflects the heavy pressure on the dealer network. BMW’s claim that it will “proactively reduce wholesale targets” may not be a strategic adjustment but a rout.

But the new chairman’s exact words on the earnings call were: “The core principle is that price and profit must be balanced in both directions… We will not blindly engage in a price war simply at the cost of profit. The existing pricing system is resilient.”

On one side, dealers are closing; on the other, “the pricing system is resilient.” On one side, the i3 has fallen below ¥188,000; on the other, “no price war.” How tough a chairman’s mouth can be depends on how soft his financials are.

Dealers are the last physical contract between a brand and its owners. When 4S stores close en masse and owners’ prepaid maintenance packages go unclaimed, BMW loses not only a sales touchpoint but also the long-term trust of existing owners in the blue-and-white roundel. Selling a car is one-time; service lasts ten years. The costs saved by closing stores will eventually be repaid with interest through repeat purchases and word of mouth.

03 Electrification: Among BBA, BMW Is the Last

Among BBA—Mercedes-Benz, BMW, and Audi—BMW is the last to put a new-generation native BEV platform into mass production in China.

Mercedes-Benz launched the EQC in 2019 as a trial and brought the EVA dedicated EV platform in 2021; Audi co-developed the PPE high-end EV platform with Porsche, and the Q6L e-tron went on sale in 2025. BMW, by contrast, long relied on the CLAR combustion-electric shared platform to build EVs—sharing body architecture between ICE and EV, with constrained battery layout, a low 400V fast-charging ceiling, and inherently insufficient onboard computing power.

The cost of ICE-to-EV conversion is written in sales. In Q1 2026, the three CLAR-based domestically produced BEVs retailed only 5,680 units combined; the i3 averaged about 2,000 units a month in 2025, and in February 2026 fell to 577.

BMW Brilliance officially confirmed earlier that the i3 and iX1 were discontinued in July 2026, while i5 production was suspended, with resumption pending. BMW’s domestically produced BEV line has entered a gap period with zero models on sale, expected to last until the Neue Klasse iX3 launches in Q4.

Discontinuing old models is not waiting for an upgrade; it is giving up.

The real card, the Neue Klasse platform, was announced back in 2021. The first production model, the iX3 long-wheelbase version, only opened pre-sales at the 2026 Chengdu Auto Show in August, adopting a strategy of same price for pre-order and launch, with a unified national price starting at ¥269,900. But the delivery rhythm is the real pain point: the official line is that the iX3 long-wheelbase version will begin deliveries in November 2026, yet before the end of October, more than 500 stores nationwide had not a single fixed display car, and sales staff could only rely on “national roadshows” and “selling pictures.” From the pie in the sky in 2021 to delivery in 2026, five years passed.

What does five years mean? CPCA data show China’s NEV penetration was 14.8% in 2021; in Q1 2026, it surged to 54.1%; from April it broke 60% and held above that level for three consecutive months. By June, China’s NEV retail penetration had risen to a historic high of 62.8%.

In Q2, BEVs accounted for 19.8% of BMW’s global deliveries, and 31.3% in Europe. Yet in China, BEVs made up only 9.7% of BMW’s own deliveries, while China’s overall NEV retail penetration reached 62.8%.

Break those five years apart and a recurring pattern emerges: BMW was “in time” every time, yet “one step late” every time. When Neue Klasse was announced in 2021, it still had the CLAR platform to keep it alive, so it chose to squeeze maximum profit from ICE-to-EV conversions and push the real platform to “later.” By the time China’s penetration passed 60%, it discovered that what had been eaten away was not only time but also pricing power.

The Neue Klasse iX3 is genuinely sincere on price, finally equipped with a full-domain 800V platform and up to 400 kW fast charging, and urban navigation assist co-developed with Momenta; the top-trim 50L xDrive has a CLTC range of 919 km. But setting aside the widely controversial exterior and the cockpit that eliminates physical buttons, in the 2026 electric SUV market, BMW itself knows that the car’s shortcomings in intelligence and assisted driving must be filled by local partners. And it faces the most crowded gladiator arena in the ¥260,000 class, with the Tesla Model Y, Li Auto i6, Xiaomi YU7, AITO M7, and others all in that price band.

Being late itself is not scary. What is scary is that after being late, the quality of the ticket has also changed.

The essence of “in time but one step late” is a genuine failure of corporate governance: the people who decided to keep milking ICE-to-EV profits are no longer in positions responsible for the iX3’s success or failure; when the consequences materialize, another unfamiliar face takes over.

More subtly, in March 2026, when BMW released its 2025 financial results, it announced that because L3 autonomous driving had not yet reached a commercially profitable level, it would temporarily lower the R&D priority of the project. While others are racing on urban intelligent driving, BMW is “lowering priority.”

Mercedes-Benz’s MB.EA has been mass-produced, Audi’s PPE has launched, BMW’s ICE-to-EV models have stopped production, and Neue Klasse has finally arrived. But its strong start came from cutting the blue-and-white roundel to the bone. When a car’s communication focus becomes “cheaper than the old model,” the brand narrative retreats from “technology leadership” to “value for money.”

A hundred years of talking about driving pleasure, and in the end it still has to be told through discounts.

04 Changing the chairman, changing the people, cutting jobs: BMW is overhauling itself

Sales collapsing, prices collapsing, electrification collapsing, quality collapsing—four lines in emergency. BMW’s choice is: change people.

On May 13, 2026, Oliver Zipse, who had led BMW for years, stepped down, succeeded by Milan Nedeljković, who came from the production side. China was even more thoroughly reshuffled: from April 1, 2026, Christian Ach succeeded Sean Green as president and CEO of BMW Group Region China.

Christian Ach had never managed the Chinese market before; his career was concentrated in Germany and the Nordic region. During his time as head of marketing in Germany, one in every five BMWs sold was a BEV. Sending a “German who understands EVs” to China seems logical, but understanding German EVs does not necessarily mean understanding China’s EV market. At the Chengdu Auto Show, he said, “Every era has its own BMW.” A fine line. But a German executive who has never worked in China being sent to “stabilize BMW’s base in China” is itself a microcosm of headquarters’ misalignment with the Chinese market.

Sean Green, a “China hand” who had worked in the Chinese market for more than a decade, formally took over as president and CEO of Region China in October 2023, only to step down hastily after a little over two years and be transferred to vice president of MINI Americas. During his tenure, BMW’s annual sales in China slid from about 715,000 in 2024 to 626,000 in 2025. His public remark at the 2025 China Auto Forum was to complain that “the ongoing price war has pushed industry profitability to extremely low levels.” He complained, but did not solve the problem.

Before Sean Green there were Jochen Goller, Christoph Stark, Karsten Engel… The list of BMW China CEOs is long, but the sales curve has only one direction. BMW remains; CEOs flow like water. Every one of them shouted “the Chinese market is crucial,” and every one of them witnessed declining sales in a different posture. The root of the problem is precisely that no one needs to take responsibility for the consequences in China, because no one can stay until the consequences mature.

On May 21, 2026, Fang Yuan was appointed vice president of corporate affairs for BMW China and concurrently vice president of public relations and corporate social responsibility at BMW Brilliance, effective June 1. Fang Yuan had worked in the BMW system for more than 12 years, with a résumé covering product and technology communications, media relations, social media, and crisis management.

Tellingly, this position had been vacant for about eight months, from the retirement of predecessor Sun Wei in October 2025 to Fang Yuan’s appointment. That exactly covered the key communications period of BMW’s continuous sales decline, successive dealer closures, and the Neue Klasse iX3 from teaser to pre-sales. A luxury brand that most needed a voice in its “second home” left its No. 1 external communications position vacant for so long. Whether there was no one to appoint or it was simply the inertia of a large corporate system, outsiders cannot know—but the consequences are already written in the sales and public opinion curves.

Under the big blue-and-white sign, there are also many local professional managers “putting in their time.” Huang Jing, vice president of dealer development at BMW Brilliance, previously served as regional vice president of the South Region, overseeing Guangdong, Guangxi, Hainan, and other core BMW sales heartlands. She once said at a BMW dealership opening ceremony that “in the face of market volatility and the challenges of change, BMW maintains the belief in win-win development and staying true to its original aspiration,” and that BMW has “unwavering confidence in the vigorous development of the Shenzhen market.”

Yet two years later, Shenzhen Baoyuanhang-affiliated stores have successively withdrawn from the network, and Dah Chong Hong Baochang, together with Guangzhou Changbao, had their authorization uniformly terminated on June 30. The position of South Region vice president is a key springboard to national sales vice president—Shao Bin and Liu Zhi both rose from it to senior vice president of marketing and vice president of sales at BMW Brilliance. But for these executives who “came out of the South Region,” the current situation there is probably not a springboard but an overdue bill.

Even more glaring than changing people is cutting jobs.

According to German business daily Handelsblatt, Reuters, and other media, BMW has reached a large-scale voluntary redundancy restructuring plan with its works council, planning to cut about 8,000 positions globally by the end of 2027, about 5.3% of its global workforce, mainly in R&D, administration, and other non-production roles, with expected one-off costs of about €1 billion.

On the earnings call, a reporter threw the layoff question at the new chairman. His response: “The numbers circulating online are not an official release, and BMW does not confirm them.” But the large-scale voluntary redundancy plan agreed with the works council was in black and white, announced by himself on the day the H1 report was released.

On one side, no confirmation; on the other, keeping lean. On one side, a €1 billion layoff bill; on the other, guidance cut for the third consecutive year, with the automotive segment EBIT margin slashed from 4%–6% all the way to 1%–3%. In Q2 2026, that margin had fallen to 2.3%.

A 2.3% EBIT margin means BMW barely earns a brand premium on each car sold. It is using scaled thin profits to keep paying for five years of strategic idling, and the bill is far from over.

In H1, BMW’s net profit was about €2.858 billion, down 25.75% year on year; revenue was €62.266 billion, down 8%. Higher tariffs had a negative impact of about 1.25 percentage points on the automotive segment’s Q2 margin.

Before stepping down, Oliver Zipse said something that, in hindsight, sounds like a prophecy: “Tariffs are like a boomerang. Who pays? The customer.” He criticized the EU’s anti-subsidy tariffs on Chinese EVs as “one of the highest tariffs we have to pay, and this cannot be in the EU’s interest.”

The boomerang has flown back. Tariffs cannot stop Chinese EVs; instead, they have cost BMW public support in China, share, guidance, and employees. The EU’s tariffs failed to protect BMW, and BMW’s price cuts failed to protect sales. Protection in both directions failed.

05 How much is the blue-and-white roundel still worth?

One of the world’s most profitable luxury brands is undergoing a “dignified devaluation.”

In the past, BMW could rely on brand, handling, and luxury to command prices clearly above mainstream brands. Today, Chinese consumers also compare cockpits, assisted driving, and charging efficiency. The value system BMW was once best at is no longer enough to support a premium on its own.

A LandRoads report shows that in 2025 BMW’s average transaction price in China was ¥341,000, lower than brands such as NIO, AITO, and Denza. A brand that has sold luxury for a century has seen its average transaction price overtaken by Chinese NEV rivals. This is no longer the price level a luxury brand should have; it is the most blunt measure of the collapse of its premium system.

Chinese people once paid a huge premium in real money for the words “blue sky and white clouds.” Now BMW itself has smashed that premium into the ¥188,000 i3, into the ¥269,900 Neue Klasse iX3, into dealers’ closure notices, and into the hearts of every owner who just took delivery.

A deeper problem lies in capacity.

According to estimates by global research firm Mobility Global, BMW’s joint-venture plant capacity utilization in China fell below 50% in 2025 and is forecast to slide further to 46% in 2026. In 2010, its plants were almost at full capacity, with utilization close to 100%. From full production to half-idled, BMW took only 15 years in China.

Capacity utilization falling to 46% is a colder calculation than the sales numbers. A plant that once ran near 100% now has to stop for a day and a half for every two days of operation. Idle production lines do not disappear on their own; equipment depreciation, wages, and supply-chain commitments are all rigid costs. For the joint venture, this means the capacity prepared for a “China boom” is becoming a specimen of sunk cost. The plants BMW built to bet on China have now become the baggage that makes its turn slowest.

BMW’s recent five years have been a classic case of “strategic idling”: spending its most valuable five years patching up ICE-to-EV conversions and repeatedly misjudging the Chinese market. In five years, the China CEO changed three times and the global CEO once, yet sales fell by 200,000 from a peak of 825,000, and the dealer network shrank to 549. Every number says the same thing: BMW has moved too slowly in China, so slowly that it cannot keep up with the rhythm of this market.

As China’s auto market shifts from brand-driven to technology-driven, and as the definition of luxury shifts from engines and chassis to smart cockpits and urban NOA, the value coordinates BMW relies on are being systematically rewritten. BMW’s problem in China is no longer something a new model, a price cut, or a round of personnel changes can cure overnight. A brand that spent a century building belief is now being “discounted to the bone” by its own hands in three to five years—and the speed of discounting is far faster than the speed of building.

There is no quick fix for BMW’s predicament. What it truly needs is a product logic “defined by China, born for China.” But that logic is precisely born in the discourse power it is least willing to give up.

Zipse said tariffs are a “boomerang.” In fact, BMW itself is the boomerang—flying for 20 years, only to land in its own back.

The next luxury car for Chinese owners may no longer be a blue-and-white roundel. The question BMW needs to answer is: when the blue-and-white roundel is no longer worth much, what does it have left to be proud of?

What cannot be sold is not just BMW’s cars but BMW’s arrogance. But arrogance requires capital, and the advantages BMW once relied on in China are being exhausted day by day.

This is the morning of a “fire-sale” BMW, and the twilight of Bavaria.

The rout may only be a matter of time.