After the US, the next biggest vehicle market is China and there is a reason why it is the second largest economy in the world. Similar to the US, which car you drive is driven by a combination of status, reliability, prices and a host of other reasons. There is a reason why the luxury brands of vehicles are large advertisers besides they work and many people know the brand names.

In an article Chan Ho-him of the Associated Press, Chinese demand for foreign luxury cars is waning as customers opt for more affordable Chinese brand models, often sold at big discounts, catering to their taste for fancy electronics and comfort.

This is bad news for European carmakers such as Porsche, Auston Maker, Mercedes-Benz, and BMW that have long dominated the upper reaches of the world’s largest auto market.

Slowing economic growth is one key driver behind weaker demand for premium cars. said Claire Yuan, director of corporate ratings for China autos at S&P Global Ratings, referring to a segment that typically counts car brands such as Mercedes-Benz and BMW.

The market share of premium car sales in China, usually priced above 300,000 yuan, more than doubled between 2017 and 2023 to about 15% of total sales, S&P said.

The share of premium cars sales fell to 14% in 2024 and 13% in the first 9 months of 2025, S&P said.

Chinese products are more competitive and more affordable even in the premium segment. The Chinese brands’ share of passenger car sales climbed to almost 70% in the first 11 months of this year, according to China Association of Automobile Manufacturers. German brands held a 12% share, Japanese brands around 10% and US brands about 6%.

BYD already has overtaken VW as the biggest car seller in China in recent years. BYD had cut prices of its electric and plug-in models by up to 34%, putting pressure on major rivals such as Geely and Leapmotor.

Mercedes-Benz’s sales by units in China fell 27%; BMW’s dropped 11.2%

China’s monthly auto production in November surpassed a record of 3.5 million units for the first time, the CAAM reported Thursday, but domestic auto sales dropped 4% year-on-year under fading demand as some trade-in subsides were halted in some regions.

Linking to dividend paying stocks, the auto sector plays a large role in the economic development of every country which manufactures vehicles. In every sector there are market segments, and most people know about the high end even though they tend to own the middle segments which has elements of the high end. If the high end is suffering, then the companies are making less profit because there is a high markup on high end products. Those at the high end of the market have the most choice and generally must project a certain image of how they are doing or not doing so they pay extra. Sometimes the mid-range has most of the features of the high range but less status. We all compare ourselves to something and that reflects our investments. This is why it is more difficult to be a value investor, buy when others are selling, sell when others are buying.

There are more questions than answers, till the next time – to raising questions.