The once "cash cow" is no longer the "magic formula" it used to be.
Traditional luxury brands represented by BBA (BMW, Benz, Audi) are facing severe challenges in the Chinese market, with profits previously provided to Chinese joint venture partners shrinking dramatically.
Beijing Automotive Group Co., Ltd. (1958.HK, "BAIC Motor") recently released its 2025 interim results, showing revenue of 82.398 billion yuan in the first half of 2025, down 12.6% year-on-year; gross profit of 11.921 billion yuan, down 32.2%; and profit attributable to equity holders of 360 million yuan, down 81.8%. This marks the lowest half-year net profit since BAIC Motor's Hong Kong Stock Exchange listing in 2014.
BAIC Motor's announcement attributed the decline in revenue and gross profit primarily to price competition and falling sales volumes. In terms of sales, the company reported that Beijing brand, Beijing Benz, Beijing Hyundai, and Fujian Benz collectively achieved wholesale vehicle sales of 421,000 units and retail sales of 427,000 units in the first half of 2025, compared to 450,000 and 476,000 units respectively in 2024, representing decreases of 6.44% and 10.29%. However, BAIC Motor did not disclose specific data for individual brands.
With its self-owned brands still mired in losses, joint venture brands continuing to weaken, and Mercedes-Benz's profitability in China significantly diminished, the "three-pointed star" is no longer the "magic formula" for easy profits. This veteran automaker faces mounting performance pressure.
Joint venture operations have long been BAIC Motor's primary profit source, with the company's profits heavily dependent on Beijing Benz for years. Beijing Hyundai has been in continuous decline since 2018, while Beijing Benz's performance in China's luxury car market has become increasingly weak in recent years. In 2024, due to Beijing Benz's declining sales and Beijing Hyundai's continued losses, BAIC's net profit fell nearly 70%.
According to Beijing Benz financial data released by BAIC Motor in March this year, Beijing Benz recorded operating revenue of 21.747 billion euros in 2024, down 3.36% year-on-year; after-tax profit of 2.443 billion euros, compared to 2.999 billion euros in the same period last year, representing a decrease of 555 million euros (approximately 4.357 billion yuan), down 18.5%.
In terms of sales volume, Beijing Benz sold 683,600 vehicles in 2024, down 7.3% year-on-year, far exceeding Mercedes-Benz's global decline of 3%. Despite attempts at "self-rescue" through price cuts and promotions, Beijing Benz's sales performance has not improved.
Bank of America Securities issued a research report in May this year stating that based on BAIC Motor's first-quarter results, it estimated that Beijing Benz, in which BAIC holds a 51% stake, saw net profit fall 17% year-on-year during the period, with sales down 9%, mainly due to increased discounting amid fierce competition.
The other major joint venture brand, Beijing Hyundai, also faces concerning performance. After reaching a peak annual sales volume of 1.16 million vehicles in 2016, Beijing Hyundai has seen consecutive years of declining sales. From 2021-2024, Beijing Hyundai's sales were 380,000, 270,000, 250,000, and 154,200 vehicles respectively.
Facing Beijing Hyundai's deteriorating market performance, shareholders from both parties have twice injected capital in recent years. In March 2022, BAIC and Hyundai reached an agreement to jointly increase capital investment in Beijing Hyundai by approximately $942 million; the most recent injection was in December 2024, when BAIC and Hyundai jointly invested $1.095 billion (approximately 8 billion yuan) in Beijing Hyundai.
Market analysts believe that slow electrification transformation is the main reason for the failure of BAIC's joint venture brands in the Chinese market. Beijing Benz's new energy products mainly consist of the EQ series, but market response has been lukewarm. According to data from the China Passenger Car Association, Beijing Benz's EQE and EQE SUV models have long maintained monthly sales in the hundreds, falling short of one thousand units.
This year marks the 20th anniversary of Beijing Benz. At the 2025 "Mercedes Standard" Technology Day in August, Beijing Benz Limited Company President and CEO Hubertus Troska stated that the 14th new model, the all-new pure electric CLA, will officially roll off the production line at Beijing Benz this year.
In April, at the Shanghai International Auto Show, Duan Jianjun, President and CEO of Beijing Mercedes-Benz Sales Service Co., Ltd., revealed in a media interview that Mercedes-Benz will launch its most powerful product and technology offensive in the Chinese market, starting with the all-new pure electric long-wheelbase CLA, with plans to introduce seven China-exclusive models by 2027.
Additionally, at the 2025 Global New Energy Vehicle Cooperation and Development (Shanghai) Forum, Leng Yan, Executive Vice President of Mercedes-Benz (China), revealed that Mercedes-Benz will produce a new luxury pure electric MPV based on the VAN.EA platform in Fujian starting in 2025, to accelerate the electrification transformation of light commercial vehicles.
Beijing Hyundai has yet to launch electric vehicles in the Chinese market. After receiving 8 billion yuan in capital injection in 2024, Beijing Hyundai stated that starting from 2025, it will rely on platforms developed in cooperation with BAIC to launch its first pure electric vehicle model, strengthening R&D capabilities in electrification, intelligence, and forward-looking technologies. Starting from 2026, it will successively develop five new models, covering pure electric and extended-range power forms.
The latest information shows that Beijing Hyundai plans to launch its first SUV built on a pure electric platform, the Hyundai ELEXIO, in September this year; the second China-exclusive pure electric sedan is also scheduled, with the earliest appearance in June 2026 and official market launch in September.
However, overall, Beijing Benz faces significant competitive pressure in China's electric vehicle market, while Beijing Hyundai's situation is even more severe.
BAIC Motor's interim results report stated that in the second half of 2025, the group will focus on "marketing empowerment, cost control, and quality improvement" as its operational core, expanding market share, improving input efficiency, and achieving business objectives.
It is understood that in the second half of this year, various brands under BAIC will launch a series of new and refreshed models, including the ARCFOX T1, the first newly developed and mass-produced model under the "Three-Year Leap Action"; the professional off-road BJ40 fuel version; the 100,000-yuan-class hybrid box-shaped BJ30; the HarmonyOS Smart Travel's first wagon, the AITO S9T; the first model based on Mercedes-Benz Modular Architecture (MMA), the all-new pure electric long-wheelbase CLA; and Beijing Hyundai's new-quality pure electric SUV ELEXIO.
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