BMW and Mercedes quarterly sales drop on weak China

BERLIN, Oct 10 (Reuters): Sluggish demand and stiff competition in China hit third quarter sales at BMW and Mercedes, the German luxury automakers said on Thursday.
The German car sector is facing multiple challenges, ranging from high production costs and managing the shift to electric vehicles to falling demand and rising competition from China.
The troubles have been illustrated most recently by cost-cutting at Europe's biggest automaker, Volkswagen, which is considering plant closures in Germany for the first time.
For the July-September quarter, BMW's sales fell 13 per cent, while Mercedes reported a 3 per cent drop.
Demand in China, the world's biggest auto market, is suffering from a flagging economy, while foreign carmakers face stiff competition from local manufacturers offering cheaper models, especially EVs.
BMW's sales in China slumped by a third, while Mercedes' fell by 13 per cent.
Mercedes' high-end segment was hit in particular by lower consumer discretionary spending in China, affecting its luxury S-Class lineup, with prices starting from 451,800 yuan ($63,700) in the country.
BMW did not specify model performance in China but said global sales of its Rolls-Royce limousines fell 16 per cent, while its MINI brand suffered a 25 per cent drop.
Mercedes also noted a subdued global battery electric vehicle (BEV) market, reporting a 31 per cent BEV sales drop. For BMW, BEV sales rose 10 per cent in the quarter.
The European Union has recently imposed hefty tariffs on Chinese-made EVs, saying they benefit from unfair state subsidies. Beijing denies this and has threatened retaliation, while German automakers, which make about a third of their profits in China, have voiced concern and called for more talks.
China is considering a hike in tariffs on large-engine vehicle imports, which would hit German producers in particular. German exports of cars with 2.5-litre engines or larger to China reached $1.2 billion last year. European consumers are reluctant to buy more expensive EVs, in part because of patchy charging infrastructure.