Volkswagen, Mercedes-Benz and BMW Profit Drops

That divergence matters because it shows the industry’s earnings power is shifting away from Germany even as global demand and pricing remain resilient enough to lift the sector overall. For investors, it underscores that Volkswagen, Mercedes-Benz and BMW are losing share in the very markets that used to power their premium margins, especially China.

The three companies have now posted three straight first-half revenue declines together. BMW’s sales fell 8% in the period and it has started a 8,000-job reduction, while Volkswagen has approved its biggest restructuring in 89 years, including another 50,000 job cuts on top of about 50,000 already planned. Mercedes has also spent months cutting costs and trying to lower manufacturing expenses in China.

China is the core of the problem. German carmakers’ sales there dropped 25% in the first half, and China’s share of their worldwide sales fell to 23.5% from 28.9% a year earlier, down sharply from about 40% in 2020. Local rivals are taking more of the electric-vehicle and software-defined car market, while China’s weaker economy is pressuring the high-end models that once drove German profitability.

The broader industry picture is still strong. Japanese groups lifted revenue 7.9%, other European automakers 9.8%, U.S. groups 4.5% and Chinese automakers 0.9%. Tesla led the ranking with 21% revenue growth, followed by Suzuki at 18% and Geely at 15%, while BYD’s European sales jumped 168%.

For the German trio, the risk now is that restructuring lands just as the market stops rewarding scale and premium branding the way it once did. Their next test is whether cost cuts, model simplification and a sharper China strategy can halt the slide before weaker growth becomes a more permanent margin reset.