BMW pins hopes on Neue Klasse to regain ground in China after sales slump

BMW is betting on its long-awaited Neue Klasse electric vehicles to regain its position in China after two years of declining sales. The problem for the German automaker is that the EV race in China may have already moved on without it, Reuters reports, writes UNN.

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Last month, BMW under the leadership of new CEO Milan Nedeljkovic issued a shocking profit warning, partly blaming the situation in China — the third warning in less than three years. On Friday, the company reported that sales in China fell by 30% in the second quarter.

Some shareholders and analysts say BMW has been too slow to bring its long-awaited Neue Klasse, or "new class," electric vehicles to a market where Chinese rivals are developing increasingly sophisticated EVs in just 18 months — about twice as fast as traditional automakers.

"If it had been launched two years ago, it could have been a game-changer," said Yale Zhang, managing director of Shanghai-based research firm Automotive Foresight. "In today's Chinese auto market... it's hard to stand out."

Chinese buyers increasingly expect the latest technology from domestic automakers such as Nio, which demonstrated its flagship ET9 sedan driving over speed bumps with a tower of champagne glasses balancing on the hood — without spilling a drop — to showcase the car's advanced suspension system.

The first BMW Neue Klasse model for China, the iX3 SUV, is set to go on sale in November.

BMW's challenge reflects a broader struggle facing German premium automakers in China, where the engineering pedigree and internal combustion engine heritage that help sell high-margin models in Europe and the U.S. carry less weight with many buyers.

"Chinese consumers are no longer buying into that," said Wang Xianbin, vice president of the Gasgoo Research Institute.

Instead, they prefer local brands such as Nio, Geely's Zeekr, and Xiaomi, which offer smart EV features tailored to Chinese tastes.

Chinese premium brands are openly targeting customers of BMW, Audi, Porsche, and Mercedes.

Only about 5% of BMW's sales in China are fully electric, according to Global Mobility data, in a market where EVs account for 46% of car sales. BMW sales in China fell in both 2024 and 2025. Sales of Mercedes and Volkswagen Audi brands also fell, dropping 28% and 19% respectively in the first half of this year.

Hendrik Schmidt of DWS, which is among BMW's top ten investors, said direct China experience among the company's top management and supervisory board is limited, adding that the scale of the problem was not fully appreciated.

"From our point of view, the dynamics here were significantly underestimated," he said.

A company spokesperson said BMW's top management has extensive "China experience," and the company adheres to a country-specific product strategy that includes "a greater focus on integrated digital services, enhanced connectivity features, and rear-seat comfort."

According to Shanghai-based consulting firm LandRoads, BMW's average transaction price in China in 2025 was 341,000 yuan ($50,200), lower than local brands such as Nio, Aito, and Denza. Among German premium brands, only Audi was priced lower at 287,000 yuan.

BMW lowered some of its list prices in China in coordination with local authorities in the first quarter, a spokesperson said. Independent dealers are also free to set their own prices and discounts, she added.

But analysts say price cuts alone are no longer enough. Chinese buyers still want value for money, while Zhang said local competitors are "armed to the teeth with cutting-edge features."

"Today, Chinese consumers are not just choosing a car based on big discounts," said Wang from Gasgoo.

As a former BMW production chief, Nedeljkovic is considered one of the architects of the Neue Klasse, the platform underlying 40 new launches by next year, which has spurred encouraging demand in Europe.

The launch of the iX3 in China was delayed after BMW switched from its own technologies to Chinese partner Momenta to provide driver assistance technology, a feature many local consumers now consider essential.

A spokesperson said BMW takes a different approach to so-called Chinese speed, pointing to thorough testing throughout the development process to ensure customer safety.

Wang from Gasgoo said he first heard about the model four years ago, but claimed the market has changed since then, and BMW's marketing around range anxiety already sounds outdated.

"This caused concern two or three years ago," said Chang Yan, founder of Supercharged, a popular blog focused on electric vehicles on China's Weibo platform.

He said attributes often touted as technological advantages in Europe — handling and performance — do not necessarily resonate as strongly in China, where domestic brands have become "much more aggressive in design and features."

Wang from Gasgoo said BMW's product development is still largely driven from its Munich headquarters, and the company does not fully understand what Chinese consumers want.

"Overall, it's clear that BMW is one step behind," Wang said.

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