BMW and Volkswagen Group reported declining second-quarter vehicle sales, mainly due to a sharp downturn in China, where weaker consumer spending, a property crisis, and intense competition from domestic EV makers such as BYD have hurt demand. BMW’s China sales fell 30%, while Volkswagen Group deliveries in the country dropped 37%.

The struggles add to a difficult period for Germany’s auto industry, with Porsche and Mercedes-Benz also reporting weaker deliveries.

Volkswagen is responding by cutting costs and simplifying its business, including plans to reduce its vehicle lineup by up to 50% and become more agile. However, more aggressive restructuring proposals—such as 100,000 job cuts and closing four German factories—failed to gain approval from the supervisory board.

BMW is also increasing cost controls after lowering its 2026 outlook and faces the prospect of becoming the least profitable major European automaker.

BMW has been better positioned than some rivals due to its flexible approach to offering multiple powertrains rather than relying only on EVs.

Its new Neue Klasse EV platform, developed with more than €10 billion in investment, is beginning to launch with models such as the iX3, which has already attracted strong demand.

Despite the challenges, there were some positives. BMW saw sales growth in the U.S. and Europe, supported by stronger EV demand, while Volkswagen also recorded higher deliveries in Europe and North America.

VW’s European EV order backlog has grown significantly, though major brands including Porsche, Audi, and Volkswagen itself continue to face global sales declines.