The five major German automakers' profits are expected to decline across the board in 2025, with the Chinese market becoming the best "observation window" for their transformation.

Can AI · Can exclusive Chinese market models become a breakthrough for German brands’ transformation?

Cailian Press, March 17 (Reporter Liu Yang) — With Audi’s financial report released, the performance of the five major German automotive brands for 2025 has been announced.

As expected in the industry, influenced by tariffs, challenges in electrification transformation, and sluggish sales in the Chinese market, the five major German brands—including Volkswagen, Mercedes-Benz, BMW, Audi, and Porsche—are all experiencing a comprehensive decline in performance by 2025. In an increasingly uncertain external environment, the German automotive industry is momentarily “trembling.”

On March 17, Audi released its 2025 financial report, showing that Audi’s full-year revenue reached €65.5 billion, a 1.5% increase; operating profit was €3.37 billion, down 13.6% year-over-year.

“2025 is a highly challenging year, with escalating geopolitical turmoil, the impact of U.S. tariffs, and intensified competition in the passenger car market, leading to significant price pressures,” said Audi management after the earnings release. “Strict European carbon emission targets also put financial pressure on the company. For example, U.S. tariffs added €1.2 billion to Audi’s costs, nearly eroding 2% of its sales margin.”

Despite this performance falling short of Audi’s expectations, its profit margin among the five German automakers is relatively strong. Earlier, BMW Group announced its 2025 financial results, with full-year revenue of €133.45 billion, a 6.3% decrease; pre-tax profit (EBT) of €10.236 billion, down 6.7%; and net profit of €7.451 billion, down 3.0%.

In terms of sales, BMW sold 2,463,681 new vehicles in the 2025 fiscal year, a 0.5% increase. China remains the group’s largest single market globally, but sales there declined by 12.5%; meanwhile, European and American markets grew by 7.3% and 5.6%, respectively.

“Based on the average sales over the past few months, Chinese sales are expected to remain roughly the same as the previous year.” For the 2026 fiscal year, BMW Group expects that rising tariffs will further reduce the operating profit margin of its automotive division by about 1.25 percentage points.

Mercedes-Benz, a longtime rival, also faced difficulties. The financial report shows that in 2025, the group’s adjusted EBIT was €8.2 billion, down 40% from €13.7 billion in 2024; revenue was €132.2 billion, a decline of over 9% from €145.6 billion the previous year. Mercedes stated that efficiency improvement measures effectively mitigated the negative impacts of declining sales (especially in China), net price declines, tariffs, and exchange rate fluctuations.

Volkswagen Group, as a major German automaker, had a notably representative performance in 2025. The financial report indicates that Volkswagen’s operating profit was €8.9 billion, a roughly 54% decrease from €19.1 billion in 2024, the lowest level since 2016. Porsche, which contributed over 30% of Volkswagen Group’s profit, became a significant drag. In 2025, Porsche’s revenue was €36.27 billion, down 9.51%; sales profit was €413 million, down 92.68%. Amid the impact of U.S. tariffs, Porsche’s cost adjustments, and intensified market competition, price and product mix changes have hampered profitability. Volkswagen warned that “business will remain difficult in the coming year” and plans to continue strict cost controls—aiming to cut about 50,000 jobs in Germany by 2030.

Notably, besides “shrinking” and “resetting,” the Chinese market remains an important window for observing the transformation of German automakers.

Regarding China, BMW will debut its dedicated new generation BMW iX3 long-wheelbase version at the Beijing Auto Show in April. This model, developed jointly by BMW and local R&D teams specifically for China, is seen as BMW’s “most Chinese-style” product. With this new vehicle as a symbol, BMW expects 2026 to be a big year for product launches and deliveries in China, with about 20 new or facelifted models from BMW, MINI, and BMW Motorrad brands. Volkswagen Group has also announced that it will launch the “largest-ever” new energy vehicle offensive in China in 2026, with over 20 new models. Among them, Audi will introduce 8 new models, including the new Audi Q5L, Audi A6L, Audi A6L e-tron, and the second mass-produced model under the AUDI brand, the Audi E7X.

Similarly, Mercedes-Benz plans to release 7 China-exclusive models out of 40 new vehicles globally from 2025 to 2027; in 2026, Mercedes will launch over 15 new and facelifted models in China. Oliver Thöne, a board member responsible for Greater China at Mercedes-Benz, stated that the company aims to improve profitability of electric vehicles in China through its new EV strategy.

“The company is making adjustments based on the Chinese market and consumer needs,” said Porsche CFO Jochen Breckner at the earnings conference. Porsche is attempting to further adapt to the Chinese market through localization, such as deeper cooperation with local partners in infotainment and digitalization. The new generation in-car infotainment system designed for China is scheduled to be launched in some models in 2026. Porsche plans to announce detailed measures for its “2035 Strategy” this fall.

(Reporter Liu Yang, Cailian Press)