Mercedes and Porsche’s fight with China is coming close to home
Manufacturers led by BYD Co. have opened a new front in the fight for dominance of the auto industry by redefining “Made in China” as a global symbol of luxury for the electric-vehicle age. After challenging the likes of Mercedes and BMW AG in their home market, they’re taking the fight to Europe and making inroads.
The clearest sign of their impact came on Friday, when Mercedes reported its weakest profitability since the former cars-to-trucks conglomerate broke itself up in 2021 to become more nimble. Porsche AG, the maker of the 911 sports car, said it’s weighing cost cuts and reviewing its model lineup after a demand slump in China caused earnings to plunge.
While China has roiled the auto industry with cheap EVs — triggering tariffs from the European Union to fend them off — luxury brands were seen as safer because of their heritage and high-end status. That assumption is now in doubt and puts the $1.2 trillion global market for premium and luxury vehicles in play.
“We don’t take the competition lightly,” Mercedes Chief Financial Officer Harald Wilhelm said on Friday. While he questioned whether Chinese brands could sustain their aggressive pricing, “I don’t assume that the pressure will just go away tomorrow.”
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