BMW is losing China, can the Neue Klasse save it?

BMW (BMWG.DE) is betting that its new Neue Klasse electric vehicle lineup can revive falling sales in China, but analysts say the German automaker may already be trailing a market that is evolving faster than ever.

The company’s first China-specific Neue Klasse model, the iX3 SUV, is scheduled to enter the market in November after delays linked to switching to Chinese partner Momenta for assisted-driving technology.

The launch comes as BMW faces its third straight year of declining sales in China. The automaker said last week that second-quarter sales in the country dropped 30%, while it has also issued three profit warnings in less than three years, partly blaming weak performance in China.

China’s Electric Vehicles (EVs) Market Moves Faster

Industry experts say China’s domestic manufacturers are shortening product development cycles and offering software-focused vehicles with advanced intelligent features.

“If this had launched two years ago it could have been a game-changer. In today’s Chinese auto market, it is hard to stand out,” said Yale Zhang, managing director of Automotive Foresight.

According to Global Mobility data cited by Reuters, only 5% of BMW’s China sales are fully electric, even though EVs now account for 46% of all vehicle sales in the country.

Local brands including NIO (9866.HK), Zeekr and Xiaomi have continued to attract buyers with technology designed specifically for Chinese consumers.

Investors Raise Questions Over BMW Strategy

Hendrik Schmidt of DWS, one of BMW’s top investors, said the company underestimated the speed of change in China’s auto market.

“From our perspective, the dynamics here have been considerably underestimated,” Schmidt said.

BMW defended its strategy, saying its leadership has extensive China experience and that the company is increasing its focus on digital services, advanced connectivity and rear-seat comfort for Chinese buyers.

Analysts, however, say price reductions alone are unlikely to reverse the trend as consumers increasingly prioritize intelligent features over discounts.

Separate US Recall

In a separate development, BMW announced a recall of 29,119 U.S. vehicles after the U.S. National Highway Traffic Safety Administration said an engine starter relay could corrode, overheat and increase the risk of fire. Dealers will replace the affected component free of charge.

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