BMW is avoiding Tesla's price war in China, Zipse says

BMW is confident it can stay strong in China, its biggest market, because its premium status is less challenged by local rivals than those in volume segments, CEO Oliver Zipse said.

Mass-market brands from global automakers have come under increased pressure from domestic brands in the Chinese market in recent months. Price cuts launched by Tesla in January have also put pressure on sales and earnings.

Zipse said premium automakers such as BMW are better insulated from this pressure

"Several manufacturers are currently lowering prices – in some cases substantially -- to gain market share," Zipse said on the company’s first-quarter earnings call on May 4. "At the BMW Group, we have a strong position in China."

BMW was the No.1 German premium brand by unit sales in the first quarter. Its China sales fell 6.6 percent to 195,100 vehicles. Mercedes-Benz sales increased to about 190,000 from 186,000 in the same quarter last year. Audi's Chinese deliveries slumped by 16 percent to 137,315.

Zipse said BMW sold "significantly more electric vehicles in China" than its traditional rivals and "also more than many new manufacturers."  He did not break out BMW's EV sales in China.

China accounted for 33 percent of BMW’s global sales at 791,985 units in 2022, down 6.4 percent on the year before.

In China, BMW builds the i3 electric compact car, as well as the iX1 long-wheelbase compact electric SUV and electric iX3 midsize SUV. The company aims to have 11 full-electric models on sale in the country by the end of the year, including imported models.

Zipse said its models were mainly sold between 350,000 yuan ($51,000) and 1 million yuan ($145,000), where the brand has fewer competitors.

"The fastest growth in the Chinese market is in the base segment. Unlike here in the Western world, where it's exactly the other way around," he said.

Chinese brands have been increasingly pushing into the premium segment with EVs featuring a strong focus on high technology. Brands such as Nio, Xpeng, Aion, HiPhi and Li Auto have established a new market for homegrown premium products, with growing success.

European premium brands remain strong in combustion engines, which are still popular despite the increasing push to electric.

Mercedes touts success

Mercedes is touting its success in China at the more expensive end of the premium market.

"There is tense competition on the BEV side, whereas the situation in the top-end is still dominated by the internal combustion engine world," Harald Wilhelm, Mercedes Chief Financial Officer, said on his company’s earnings call on April 28.

“We definitely want to emphasize on the top-end and not enter too much into the very competitive environment in the lower range,” he said.

BMW last year consolidated its Brilliance joint venture after increasing its stake to 75 percent. The JV has two production plants in the country.

BMW also formed a joint venture with Great Wall called Spotlight Automotive with the goal of developing a new electric Mini hatchback. The car is expected to be built in China for planned global launch date of the fourth quarter this year.