Slow & Calm: Chinas Demand for European Luxury Cars Hits the Brakes | Financial Buzz

Slow & Calm: Chinas Demand for European Luxury Cars Hits the Brakes

China, the world’s largest car market by sales revenue, has been the center point of profitability for car companies such as Audi, BMW, and Daimlers Mercedes-Benz division in recent years. But the automakers have been vocal in their warnings of declining returns in China, against a slowing economy, rising competition from affordable and unique domestic brands, and limit on car ownership in big cities. According to a Chinese automotive dealer: “the cash cow is beginning to die”. This became clear on Tuesday as Audi reported a fall in monthly sales in the country for the first time in more than 2 years. Audi, a unit of German automotive giant Volkswagen and the leading supplier in China’s auto market, said sales fell 1.6% in May compared with the same month last year. Sales of BMW’s and the Bavarian company’s Mini vehicles were down 4% in May, the manufacturers first sales decline in China in a decade. Additionally, Jaguar Land Rovers has also seen sales of its once popular SUV stumble as much as 16% in the first quarter. Overall, JLR’s China deliveries were down almost 32% year on year in May. The Chinese slowdown comes at an awkward time for many global carmakers, who are faced with brutal reversals in two other once- buoyant markets: Brazil and Russia. There had been hopes that European car sales, growing after six years of post-crisis decline- might somewhat offset the Chinese slowdown, but these were damped on Tuesday by figures that showed sales in the region decline last month for the first time in 2 years.