BMW’s all-electric Neue Klasse Series is expected to reignite the growth of its biggest market in China after a drop in sales during the first half 2025.
The German company introduced this week its first Neue Classe model. This marks the start of a major portfolio overhaul aimed at improving competition with local competitors and recovering profitability.
Sales slump in China
BMW has, along with several other European carmakers, struggled to make headway in China. Intense local competition, coupled with a weakened property market, have affected luxury vehicle demand.
BMW sales dropped 15.5% during the first six months of 2025. This shows the difficult market for foreign brands.
BMW Chief Financial Officer Walter Mertl was optimistic despite China’s economic downturn.
Mertl said to Reuters: “We’re more competitive than ever with this product.” With the availability of Neue Klasse increasing, China will grow again.
New Klasse IX3 launched
BMW unveiled on Friday the Neue Klasse iX3, a sport utility vehicle that will debut in China in mid-2026, ahead of the IAA 2025 car show.
Launching the vehicle is a major step for automaker in its efforts to move towards electrified transport.
This timing highlights the increasing pressure that international automakers are under, since the IAA is now a battlefield for the defense of market shares in Europe from a Chinese presence which has been rapidly growing.
Domestic manufacturers continue to be more competitive than their foreign rivals in the luxury market. They use lower prices and flexible strategies to both dominate and challenge existing incumbents on other markets.
Cost and Margin Improvements
BMW is committed to reducing battery costs.
Mertl stated that batteries in the Neue Klasse models cost between 40% and 50% less than the current models.
The electric line-up is expected to benefit from lower costs.
Walter Mertl, BMW’s Chief Financial Officer, said that BMW would be able to achieve margin parity by 2026 with the iX3-50.
BMW expects an EBIT automotive margin between 5% and 7% by 2025. The longer-term target is 8% to 10%.
By the end of this decade, the company plans to retire its older models as its Neue Klasse line becomes the core of its product portfolio.
Tariffs imposed by the United States
BMW faces similar challenges in the United States where its biggest production facility is located.
Mertl stated that high import duties continue to be a drag for BMW, and are expected to reduce its profit margin by 1.25 percentage point in 2025.
In exchange for the reduction of the tariffs currently applied to European vehicles to 15 percent, the United States and European Union agreed to remove tariffs from US industrial goods.
The new tax rate is expected to apply retroactively from August 1. This would be a relief to firms such as BMW, which rely heavily on production across borders.
The The Daily Hodl first published this article BMW Bets on Neue Klasse Electric Vehicles to Revive Growth in China After Sales Slump: Report.
