Sales of international luxury car brands in China continued to decline sharply in June 2026, as domestic electric vehicle (EV) manufacturers consolidate their lead in the world’s largest automotive market. Data from the China Passenger Car Association (CPCA) showed luxury car sales fell 29.5 percent year-on-year to 162,224 units, reflecting weakening consumer demand for high-priced petrol-powered vehicles.
The luxury segment largely comprises foreign marques such as BMW, Jaguar, Infiniti, Mercedes-Benz, and Land Rover, many of which still predominantly offer traditional petrol models on the Chinese mainland. Only two domestic EV brands—BYD’s Yangwang and JAC Group’s Maxxu—are classified as luxury in this category. Analysts attribute the decline to consumers increasingly favoring electric models amid shifting preferences and rising crude oil prices.
“The luxury segment was once considered a stronghold for international brands,” said Zhao Zhen, sales director at Shanghai’s Wan Zuojin Auto dealership. “However, the growing appeal of affordable EVs from local manufacturers is eroding their market share, and this downward trend is likely to persist.”
In the first half of 2026, luxury vehicle deliveries continued to slump compared to the previous year, with the segment’s share of total new vehicle sales dipping to 10.2 percent in the quarter ending June, down from 12 percent in 2024 and flat compared with 2025.
Two decades ago, established global automakers such as Volkswagen and Toyota dominated China's automotive market, commanding over 80 percent market share thanks to locally assembled models produced through joint ventures. However, these companies have lagged in the rapid electrification shift that has propelled domestic players like BYD and Leapmotor to prominence since 2023.
EV deliveries—including pure electric and plug-in hybrid vehicles—increased 14 percent year-on-year during the first six months of 2026, reaching 4.7 million units and making up 54 percent of total vehicle sales, according to CPCA figures.
Economic concerns also weigh on consumer spending patterns. Eric Han, senior manager at Shanghai consultancy Suolei, noted that uncertainty over job security and income growth has made middle- and upper-income buyers more cautious when considering expensive purchases.
Industry forecasters are adjusting their outlook for the overall market amid these shifts. Global consultancy AlixPartners projected a 10 percent year-on-year decline in light vehicle sales to 24.6 million units for 2026, citing an uncertain economic environment and easing government support. Meanwhile, UBS warned that weakening demand for foreign-branded cars could eventually result in an overcapacity of up to 10 million vehicles, though it did not specify a timeframe for this development.