Volkswagen and Mercedes-Benz reported sharp declines in sales in these two key markets, losses that could not be offset by gains in other regions. Volkswagen's sales dropped by 0.5 percent, falling below the nine-million-vehicle mark for the first time since the pandemic years of 2021 and 2022. Sales chief Marco Schubert described the performance as solid given the highly challenging conditions.
Mercedes-Benz saw a nine percent drop in its core business, delivering 1.8 million vehicles. The brand with the star is suffering more than its arch-rival BMW from the adverse global environment. The Munich-based company maintained its position as the world's leading premium automaker, despite a slight decline in core brand sales to 2.17 million vehicles.
Both Volkswagen and Mercedes reported significant losses in China. In 2025, Volkswagen sold 2.7 million cars in China, down eight percent from the previous year. The company is particularly struggling with fierce competition in the electric vehicle market, where numerous Chinese manufacturers are luring customers with low prices. For years, the Wolfsburg-based automaker dominated the Chinese market, but it is now only the third-largest carmaker in the country, behind BYD and Geely. VW Group CEO Oliver Blume is counting on a partnership with electric vehicle specialist Xpeng to regain ground. More than 20 new models are expected to turn the tide this year.
Mercedes sold 19 percent fewer cars in China. The company cited tough competition as a key factor. In the luxury segment, the persistent crisis in the real estate market is also dampening demand from affluent buyers for high-end vehicles.
The two manufacturers also faced declines in the US. Volkswagen's sales shrank by 10.4 percent, while Mercedes handed over 12 percent fewer vehicles to dealers. Tariffs, which make imports more expensive, are a significant factor. Although Volkswagen and Mercedes both operate factories in the US, they still rely on imports for many key models. The end of electric vehicle subsidies has also had an impact. Trump allowed tax credits to expire at the end of September. In the fourth quarter, Volkswagen sold just 3,200 electric cars in the US, nearly three-quarters fewer than the previous year.
(Reporting by Christina Amann, edited by Olaf Brenner. For inquiries, please contact our editorial team at Berlin.Newsroom@thomsonreuters.com (for politics and economy) or Frankfurt.Newsroom@thomsonreuters.com (for companies and markets)
