by German brand factories in China are losing utilization
Only a few days after it became known that Mercedes-Benz had suspended production of the long-wheelbase electric CLA in China, a new forecast already clearly shows how difficult it is for German manufacturers to keep their Chinese capacity occupied.
Forecast for the coming years
A study prepared for Automobilwoche by the global analytics firm Mobility Global found that joint ventures of German companies in China, including Audi, BMW, Mercedes-Benz, and Volkswagen, operated at less than 50% capacity in 2025. This figure will continue to decline: in 2026 it may drop to 46%, and by 2030 to 44%.
Declining demand for German cars
This is a stark contrast to the situation in 2010, when the same factories were operating at full capacity, reports Automobilwoche. This trend shows how quickly German brand cars have lost popularity in China. Today, most buyers choose local brands, especially domestic electric vehicle manufacturers.
Manufacturers’ response: closures and operational changes
Low utilization has already forced Volkswagen to close its plant in Nanjing, which operated together with SAIC. A site in Urumqi was also sold. Although BMW and Mercedes have ruled out closures, sources say they are considering “operational adjustments.”
Chinese solution: exports and new factories abroad
It should be noted that foreign brands are not the only ones facing low utilization. Mobility Global forecasts that average capacity utilization across the entire Chinese automotive industry in 2026 will be around 55% — compared to approximately 90% in 2010.
To address this issue, China continues to ramp up car exports. This year, it could reach 10 million units, up from 7 million last year. Additionally, while traditional brands struggle with low utilization not only in China but also in other regions, Chinese manufacturers are leveraging high demand abroad to build new factories outside the country, particularly in Europe. Spain and Hungary are among the chosen locations as companies seek to avoid tariffs, get closer to customers, and reduce political risks.
The decline in factory utilization is not just a temporary phenomenon but a reflection of a fundamental shift in the Chinese automotive market. Previously, German brands were synonymous with quality and status; now local manufacturers offer more technologically advanced and affordable models, especially in the electric vehicle segment. China is not only reclaiming its domestic market but also actively exporting its cars and production capacity to Europe. This means that German automakers will have to not only cut production in China but also seek new strategies to remain competitive in a world where the center of gravity of the automotive industry is increasingly shifting toward China.
