BMW China Should Be Alert to the Precipice | Deep Dive Lite

In the luxury car market, it seems that another brand is facing a difficult situation.

Li Ming is a senior BMW salesperson with 15 years of experience. He has witnessed the decline of Audi, once the leader in the luxury car segment.

“I have a very deep impression of a male customer. He was an Audi owner. He came to our store angrily and said that he was willing to pay more to switch to a BMW and place an order right away,” Li Ming told 36Kr.

“He thought Audi cars were still good, but the random price cuts had betrayed the old customers. So he placed an order for a nearly 500,000 - yuan BMW 5 Series instead of a more than 200,000 - yuan Audi A6L.”

What pains Li Ming is that today's BMW seems to be following in Audi's footsteps.

“The X5 has always been the pillar of our sales and profit. In the past few years, the transaction price was almost always above 700,000 yuan, and there was even an additional fee for optional features until 2023,” Li Ming said. “But now, a BMW X5 can be purchased for 540,000 yuan, and still, it's not selling well.”

According to his own research with customers and the systematic analysis of the store, the rise of domestic new - force brands such as Wenjie M9 and Li L9 has indeed occupied some of the market share of the BMW X5.

“In the past, we mainly relied on a continuous stream of new customers to make money. Now, most of these customers have gone to buy domestic cars,” Li Ming said. “The remaining new customers basically pay for the brand's sentiment. They couldn't afford it before but always yearned for it. Now that BMW is cheaper and they have the money, they just want to fulfill their long - held desire.”

However, after BMW announced its withdrawal from the price war in July last year, the situation has further deteriorated.

“The motivation for these sentiment - driven customers is actually the price cuts. When BMW became cheaper, they would come to take a look. As a result, when BMW directly announced its withdrawal from the price war, many customers thought BMW had become more expensive again and then went to buy new - force brands,” Li Ming sighed.

“Ten years ago, we had very high standards for recruiting salespeople because at that time, new employees would almost always make a sale once they joined. But now, the only requirement for recruitment is the ability to negotiate prices. Those who can negotiate with customers and snatch orders from other stores are considered capable.”

BMW, whose prices have dropped to rock - bottom, is hurting its loyal customers who believe in the brand's value.

The Halo Fades, and the Channel Suffers from Internal Strife

From 2010 to 2014 was the golden era of BMW in China. After the decline of the Audi dynasty, BMW became the most popular luxury brand.

The price of the 3 Series exceeded 350,000 yuan, and the 5 Series was around 500,000 yuan. At that time, the imported X5 was even a million - yuan luxury car. In 2014, when the total sales volume of passenger cars in China was only 17.9 million, the 500,000 - yuan BMW 5 Series achieved remarkable sales of 138,400 units.

So, BMW began to expand rapidly. From 2014 to 2016, the number of BMW car dealerships in China remained stable at 460. By 2017, this number soared to 600.

Behind the rapid expansion of more than 100 stores in a year, BMW chose a relatively easy way: to recruit a large number of dealers.

In the era when selling BMWs was a lucrative business, countless people flocked to it. “If you had the funds to support two stores, you would dare to invest in a BMW dealership, and in most cases, you would make money right away,” an industry insider told 36Kr.

Behind the more than 600 BMW stores are more than 200 different dealer groups. When the market environment was good, this widespread model quickly opened up BMW's sales channels. Judging from the sales results, it was indeed effective.

“Generally, this model is not easily adopted because it is very difficult to manage,” a senior dealer told 36Kr.

In the dealer model, BMW usually offers dealers a wholesale price that is 90% of the suggested retail price. After dealers pay for the cars, they sell them to consumers at a terminal price and earn a commission. BMW controls the minimum selling price of different dealers across the country to ensure that the brand's image is not downgraded.

“After 2016, BMW's growth rate slowed down but remained stable. At that time, BMW had sufficient premium ability, and consumers were willing to pay the price without much need for price cuts,” a BMW dealer told 36Kr. “The main competitor at that time was Mercedes - Benz, but it was much more expensive than us, so it wasn't really a head - on competition.”

What BMW mainly faced was the price comparison among its different dealers.

Before the direct - sales model led by Tesla and domestic new - energy vehicles emerged, this was actually the model of China's automobile consumption. There was no transparent price in the market. How much a consumer paid for a car depended on the negotiation with the dealer. Different people might get different prices at different stores.

Compared with the direct - sales model, the dealer model has its drawbacks. However, until early 2024, BMW's sales were still relatively stable, until the new 5 Series was launched.

The 5 Series is one of BMW's most classic and best - selling models. Both the manufacturer and the dealers were quite confident in the sales plan and stocked up enough inventory waiting for consumers.

However, the new 5 Series was launched during the off - season. From February to March, its national sales were only about 4,000 units. Dealers with high expectations and sufficient inventory began to face inventory pressure.

For small - scale dealers with limited financial resources, this was undoubtedly a fatal blow.

“Wholesaling a batch of 5 Series cars usually requires at least several million yuan in capital. But in the past, we weren't worried because the cars would be sold within a month, or even less than half a month, and the cash would flow back,” a dealer told 36Kr. “Some bosses had limited working capital. If several million yuan was tied up in unsold cars for three months, they might not be able to pay the salaries.”

Unable to bear the pressure, dealers had to cut prices to survive, hoping to break through the low - price barrier. They originally thought it was just a short - term crisis, but no one expected it to become the norm later.

When the new 5 Series was first launched at the suggested retail price of 430,000 yuan, no one was interested. After several price cuts, the sales volume began to pick up slightly, reaching about 8,000 units. As a result, consumers figured out BMW's strategy: when the price is high, as long as no one buys, BMW will definitely cut the price under pressure.

“There are actually quite a few customers who are loyal to BMW, especially for the 5 Series, which mainly targets replacement customers. Since they already have a car to use, replacement customers are not in a hurry to place an order. There is no subsidy for gasoline cars to rush for, so they are even willing to wait for a year for the 5 Series to cut the price,” a dealer told 36Kr.

So, BMW's matrix models that support sales, including the 5 Series, X5, X3, and 3 Series, have all gone through such price cuts.

At the beginning, this price - cut wave was just a last - ditch effort by dealers under excessive inventory pressure. But once users learned that they could buy a BMW 3 Series for 220,000 yuan, they would never be willing to pay 320,000 yuan for it again, even though 320,000 yuan was considered a “heavily discounted” price in the past for both BMW and its customers.

“BMW customers have trust in the brand. With so much vehicle information available online, the only purpose of customers coming to our store is to negotiate the price. If the neighboring store quotes 218,000 yuan, are you willing to offer a lower price?”

Dealers are forced to cut prices to survive under pressure. As a result, their price system begins to face chaos.

The BMW i3 is the most typical example. It is an electric car with a suggested retail price of 300,000 - 400,000 yuan. BMW, which attaches great importance to electrification, once set a relatively high sales target for its electric models.

“Normally, there are subsidies for meeting the sales target at the end of the year. But from 2023 to 2024, if we don't meet the sales target of electric vehicles, we might not even get the normal subsidies for gasoline cars,” a dealer told 36Kr.

The widespread news of i3 price cuts on the Internet is actually spread by dealers. “We will massively promote the information of the cars we want to sell, and price cuts are the fastest way to boost sales.” So, the slogan “Buy a BMW for 200,000 yuan” began to appear on various platforms.

The price cut to 200,000 yuan is indeed due to the pressure from domestic new - energy vehicles. But now, the on - road price of the BMW i3 has dropped below 180,000 yuan. The drop from 200,000 to 180,000 yuan is the result of the price competition among BMW dealers.

When BMW's total sales cannot support all dealers, internal strife is inevitable.

“In the past, new customers supported the sales. Now, the users coming to the store are basically BMW 'fans'. They have already decided to buy a BMW and just need a lower price,” a dealer told 36Kr.

In the past, with a large number of new customers to meet their profit needs, dealers had the power to reject the outrageous price demands of some customers. For dealers, the higher the selling price, the more profit they could make. No one was willing to cut off their own source of income for a few orders.

But now, the proportion of these small - number customers has risen to 80%. “You can think of it this way. All dealers are competing for these few customers, and thus the internal strife begins.”

“What I hope BMW will change the most is to reduce the number of dealers. Now, the users who can be contacted by BMW are all those who want to buy. Those who are interested in new - force brands don't even come. Most of the situations where we can't close a deal are actually because other BMW stores offer a lower price.”

The selling price of a luxury car brand is a figure that is difficult to raise once it has dropped. In the future, 299,000 yuan will be the value ceiling of the BMW 5 Series, and it will be difficult for consumers to accept a price increase.

BMW's premium ability and brand value are inevitably declining. But apart from price cuts, BMW seems to have no better solution.

Cognitive Dislocation and the Fading of Performance Edge

In the first quarter of 2025, BMW's sales in China were only 155,200 units, a year - on - year decrease of 17.2%. Facing the decline in sales, BMW is not indifferent.

“BMW has been in contact with Chinese intelligent - driving suppliers. It definitely needs to catch up,” a BMW China insider told 36Kr. However, even if it decides to use the advanced solutions of domestic suppliers, the first model equipped with such technology will not be available until at least 2 - 3 years later.

Like all traditional foreign - funded automakers, BMW also faces the challenges brought by the development and verification cycle.

“But intelligent driving cannot solve all of BMW's problems. The users who are still buying BMWs won't stop buying just because there is no intelligent driving. Nor will the users who are on the fence consider BMW just because of the addition of intelligent driving.”

“Why didn't the 5 Series sell well, but the Mercedes - Benz E - Class still sells 15,000 units per month? BMW doesn't quite understand the current market ecosystem,” a BMW insider told 36Kr.

In several sales reviews of BMW China, the market strategy has been considered a weakness.

“Many market practitioners in the entire industry have learned from Mercedes - Benz, BMW, and Audi. In the past, the successful implantation of the definitions of safety, luxury, and driving control by the BBA brands was the foundation of their sales and also their difference,” a senior automotive marketing expert told 36Kr.

Around 2014, BMW had a unique brand image. It planted the impression of “driving control” in the minds of a generation of Chinese consumers and successfully captured the luxury - car market. However, with the talent loss and replacement within BMW, the brand image has not grown in line with the times.

“During the E - chassis and F - chassis eras, BMW was indeed the best - driving car at that time. Even without the promotion from the manufacturer, car owners would help spread the word,” a former BMW employee told 36Kr. “After switching to the G - chassis in 2018, BMW's driving - control advantage became less prominent.”

Meanwhile, new - energy brands have entered the market and started to rewrite the technological chapter of automobile driving control.

The unique instantaneous response of electric motors and the lightweight and sensitive chassis have enabled Tesla to capture a group of performance - driving enthusiasts. The high - performance version of the Model 3 with a 0 - 100 km/h acceleration time of 3.3 seconds has once become the new generation of “driving - control god car”. Domestic brands such as Zeekr and Xiaomi have further diluted BMW's voice in the field of driving control.

“But BMW doesn't pay attention to these,” the insider told 36Kr. “Before the launch of a new BMW model, the operation team doesn't look at the market competition situation or its own business situation. They only compare with Mercedes - Benz in various aspects.”

“So now, when talking about good - driving cars, many young people don't even think of BMW. Firstly, they haven't driven a really good - driving BMW. Secondly, some electric cars now do have good driving control. BMW is no longer suitable to rely on the performance card.”

This is the case with the new 5 Series and the new X3. The comfort - oriented products have difficulty attracting the old customers who love driving, and their comfort and intelligence levels are far inferior to those of domestic new - energy brands.

BMW, with cognitive dislocation, is now in an awkward market position.

Slow - moving BMW Can't Keep Up with the Chinese Auto Market

The fundamental reason behind the sales failure and market dislocation is BMW's slowness and arrogance.

The 5 Series is one of the most controversial models of BMW in recent years. The brand has repeatedly claimed that the new design is recognized by young users, but the sales volume reflects the real attitude of the public: this ace model, which sold 138,000 units in 2014, only had a total sales volume of 89,000 units last year.

The momentum of domestic new - energy vehicles is indeed very strong, but in the luxury - sedan segment where the BMW 5 Series is located, there is actually no strong competitor.

“The BMW 5 Series didn't lose to its competitors; it just failed on its own,” a BMW insider told 36Kr. “The fact that the 5 Series is not selling well is undeniable, and now the Chinese and German sides are shifting the blame.”

The 5 Series sold by BMW in other regions of the world is mainly the standard - wheelbase version designed and developed in Germany. However, the long - wheelbase version, which accounts for a large proportion of production and sales in China, has actually changed in terms of design and configuration.

“The long - wheelbase version usually takes 4 - 6 months longer to develop than the standard - wheelbase version and is modified based on the standard - wheelbase version,” a R & D personnel told 36Kr. Regarding the new 5 Series, the Chinese team proposed to further lengthen the wheelbase and increase the space. At the same time, the chassis should be made softer because Chinese consumers now prefer a comfortable driving experience.

However, the Chinese team, which is familiar with the Chinese market, does not actually participate in the actual R & D operation. The BMW R & D team in China is