the builders premium Europeans depend too much on the Chinese market, which represents around 30% for many of them. It turns out that its most sophisticated and expensive vehicles, manufactured and exported from Germany, have been falling in favor of Chinese consumers who, scared by the country’s economic situation, have avoided purchasing luxury items, opting for more rational and…cheaper purchases. This not only caused a profit cut of European brands, like now the forces people to “invest” millions in Chinese merchants to prevent them from going bankruptbetting that the market will recover soon.
The Chinese automobile market falls 22.7% in January
After years of extracting generous profits from the Chinese market, German and British luxury carmakers have seen their sales decline and, with them, the profitability of their dealer network decline. These manufacturers spent the last few quarters subsidizing its most luxurious modelstrying to contain the fall in demand. However, if this aggressive business strategy resulted in a reduction in profit margins, the current Financial aid to merchants who find themselves “with the noose around their necks” further aggravated the situation.
Porsche reduces dealerships in China after sales fall by 29%
According to automotive news, BMW alone spent more than 100 million euros to save its dealers and both Mercedes and Jaguar Land Rover were not far behind in the effort. However, even this did not prevent some concessions from going bankrupt, as happened to one of BMW’s largest stands in Beijing, the Beijing Xingdebao 5S. This was not a unique case, since More than 50% of concessions will register losses in 2024according to the China Automobile Dealers Association, and around 2000 it will close doors.
Source: Observadora
