BMW has staked its hopes on the Neue Klasse - a long-awaited family of battery-electric models - to arrest a two-year decline in sales in China. But the German automaker is confronting a market that many observers say has moved on while the Neue Klasse was delayed into production.
Under chief executive Milan Nedeljkovic, BMW last month issued a shock profit warning that partly blamed deteriorating conditions in China - the companys third such warning in less than three years. On Friday BMW disclosed that sales in China plunged 30% in the second quarter of the year.
Some shareholders and industry analysts argue that BMW was too slow to bring the Neue Klasse to China, where domestic manufacturers are introducing increasingly sophisticated electric cars at a pace that can be as fast as 18 months - roughly twice the development speed often seen among traditional automakers.
"If this had launched two years ago it could have been a game-changer," said Yale Zhang, managing director at Shanghai-based research firm Automotive Foresight. "In todays Chinese auto market ... it is hard to stand out." The comment underscores a widespread view that timing in this market can be decisive.
Chinese brands are showcasing technological advances designed to capture consumer attention. The coverage cited Nio deploying an ET9 sedan in a public demonstration in which the car drove over speed bumps while a tower of champagne glasses remained balanced on the bonnet - a stunt intended to highlight the vehicles advanced suspension.
BMWs first Neue Klasse model destined for China, the iX3 SUV, is slated to go on sale in November.
Combustion-engine pedigree less persuasive to Chinese buyers
The difficulties BMW faces reflect a broader challenge confronting German premium automakers in China: engineering credentials and a heritage rooted in combustion-engine performance no longer carry the same persuasive weight with many Chinese buyers. Instead, consumers are increasingly gravitating to domestic marques that promise intelligent EV features tailored to local tastes.
"Chinese consumers no longer buy into that," said Wang Xianbin, vice president of the Gasgoo Research Institute. He pointed to local brands such as Nio, Geelys Zeekr and Xiaomi as examples of firms offering features and digital experiences that resonate with Chinese customers. These brands are now explicitly targeting the customer bases of BMW, Audi, Porsche and Mercedes.
Industry statistics underline the scale of the challenge. According to Global Mobility data, only about 5% of BMWs sales in China are fully electric, in a market where electric vehicles account for 46% of total vehicle sales.
BMWs China sales fell in both 2024 and 2025. Other German premium brands have also reported declines: Mercedes saw sales drop 28% and Volkswagens Audi fell 19% in the first half of this year.
Investor concern over China experience and product strategy
Among investors, concern has grown that BMWs senior leadership and supervisory board lack deep, hands-on China experience. Hendrik Schmidt of DWS, a top-10 BMW investor, said that direct China experience among the companys top executives and supervisory board was limited and that the scale of the challenge had not been fully appreciated. "From our perspective, the dynamics here have been considerably underestimated," he said.
A BMW spokesperson countered that the companys senior management do have extensive experience in China and that BMW pursues a country-specific product strategy. The spokesperson said this strategy includes "a greater focus on highly integrated digital services, advanced connectivity features, and rear-seat comfort." The spokesperson also noted that BMW lowered some list prices in China in coordination with local authorities in the first quarter, and that independent dealers remain free to set their own sales prices and discounts.
Despite those price adjustments, analysts say cutting prices alone may not be sufficient to regain momentum. Zhang said local competitors are "armed to the teeth with cutting-edge features." Gasgoos Wang added that Chinese buyers now look for value for money combined with the latest technology, rather than being swayed only by discounts.
Timing, partnerships and product attributes
The Neue Klasse platform has its supporters inside BMW. As a former production chief, Nedeljkovic is considered one of the architects of the Neue Klasse, a platform set to underpin 40 new launches by next year that has generated encouraging early demand in Europe. But the China rollout encountered delays.
The launch of the iX3 in China was postponed after BMW decided to switch from in-house assisted-driving technology to a system provided by Chinese partner Momenta - a change reflecting the importance of driver-assistance and connectivity features to Chinese consumers. The move to Momenta was one reason the China debut was pushed back.
Market watchers say BMWs development and marketing timeline no longer aligns cleanly with the priorities of many Chinese buyers. Gasgoos Wang said he first heard about the model four years ago and argued the market has evolved since then; BMWs emphasis on range anxiety, he said, now sounds dated. Chang Yan, founder of Supercharged, a popular EV-focused blog on Chinas Weibo platform, said: "That was a concern from two or three years ago." He added that attributes celebrated as technological superiority in Europe - handling and performance - do not necessarily carry the same resonance in China, where domestic brands have become more aggressive in design and features.
"Overall, its clear that BMW is one step behind," Gasgoos Wang said.
(Currency conversion used in reporting: $1 = 6.7934 Chinese yuan renminbi)