Power Plant | BBA China Leadership Changes Simultaneously: Attempting to Reunderstand the Chinese Market and Reverse Declining Momentum

Before and after the Chinese Year of the Horse Spring Festival, BMW, Mercedes-Benz, and Audi announced significant personnel changes in the Chinese market.

First, on January 30th, BMW announced that Gao Xiang, who has served as President and CEO of BMW Group Greater China for over 12 years, will be succeeded by Ke Ruichen starting May 1st.

On February 14th, Mercedes-Benz China confirmed in a statement that Duan Jianjun, President and CEO of Mercedes-Benz Sales Company, will step down two months early on March 1st for personal reasons, with Li Desi taking over his position. Additionally, from April 1st, Zhang Mingxia, Global Chief Marketing Officer of Smart Global, will serve as Executive Vice President of Sales at Mercedes-Benz Sales Company.

Duan Jianjun is also a veteran of Mercedes-Benz, having worked there for over 12 years. Before joining Mercedes, he gained experience at Volkswagen (Audi) and BMW, making him one of the few in China’s auto industry with a career spanning the three German luxury giants.

On February 26th, Audi appointed Daniel Weissland to succeed Andreas Kahl, who had been in China for 12 years, as General Manager of FAW-Audi Sales Co., Ltd.

Gao Xiang, Duan Jianjun, and Andreas Kahl have all led BMW, Mercedes-Benz, and Audi China respectively, but their departure dates are surprisingly synchronized. This reflects not only global strategic adjustments by BMW, Mercedes-Benz, and Audi but also highlights the urgent desire of the three German luxury brands to reinvent their approach in the Chinese market.

Challenges faced: Old models hit hard in China

Externally, BMW, Mercedes-Benz, and Audi are facing the impact of local brands’ high-end and intelligent transformation, most directly reflected in sales.

Since 2023, the sales of the three German luxury brands in China have been declining. BMW experienced double-digit drops in 2024 and 2025. Mercedes-Benz’s sales fell by 19.5% last year, the largest annual decline since entering China. Audi’s sales have also fallen for two consecutive years. In terms of volume, these brands have returned to their 2017 levels.

Beyond sales, each brand faces its own issues, especially Mercedes-Benz and Audi.

A notice issued by the China Association of Automobile Dealers on January 28th revealed that some authorized Mercedes-Benz dealers are facing high inventory, severe price undercutting, long rebate cycles, excessive sales pressure, and lack of exit compensation mechanisms, leading to ongoing operational pressure. The association described these as systemic issues.

This problem has also been brought to Mercedes-Benz’s global headquarters, exposing potential risks in the Chinese market. An insider said the repercussions are still unfolding, and this was one of the factors leading to Duan Jianjun’s early departure.

A Mercedes dealer said that the brand’s sales model in China tightly binds the brand and dealers. The brand sets sales targets, and dealers are responsible for selling not only popular models but also some loss-making models like the Mercedes GLB series. Both sides work to grow the sales pie, with the brand providing year-end rebates and subsidies to protect dealer profits.

When sales are stable, prices are steady, and profits are assured, this partnership can be mutually beneficial. But now, with declining sales, disrupted pricing, and shrinking profits—Mercedes’ net profit in 2024 and 2025 has sharply fallen, with 2025’s profit only about 50% of 2024’s, losing nearly €10 billion compared to 2023.

As a result, “dealer rebates” are difficult to implement in 2025, triggering some authorized dealers to unite against Mercedes. This year, Mercedes dealers collectively refused to accept loss-making models, with over 6,000 units of the GLB rolling off the line from Beijing Benz each month.

In August 2025, Mercedes-Benz’s Chairman and CEO, Ola Källenius, admitted in an interview with Germany’s “Handelsblatt”: “In China, over 100 automakers are fiercely competing in this small high-end market. Recently, consumer willingness to buy has remained low, creating unprecedented competitive pressure.” He described this fierce competition as “Darwinian,” meaning “those who fall behind will be eliminated,” and identified it as one of Mercedes’ three major challenges.

Today, Mercedes remains deeply embroiled in this challenge. Audi faces similar issues. Audi’s dealer network in China continues to shrink. By the end of 2022, FAW-Audi had about 700 authorized 4S stores; by 2025, this number had decreased to around 600, mainly due to withdrawals from Huawei’s HarmonyOS-based smart driving projects and financial strains. Notable closures include Beijing’s largest Audi dealer Huayang Aotong, Hangzhou Yuntong Hesong Audi, Tianjin’s Yonghao Audi, Guangzhou Jingxi Audi, Zhengzhou Zhongsheng Audi, and Kaifeng Jinao Audi.

A dealer from Guangxi said, “Audi is the most affected among the German luxury brands, mainly relying on fuel models like A6L and Q5L. But price wars have driven prices down, cutting into profits. Other models lack competitiveness. Now, selling an Audi often results in a loss of 30,000 to 40,000 yuan per vehicle—selling more only increases losses. Who can hold out?”

On the other hand, Audi’s perception of market changes has been somewhat slow. The brand has aggressively promoted a younger image in China, with over 64% of new Q5L and A5L orders from customers under 40, averaging 35.4 years old. In comparison, Xiaomi’s YU7 and SU7 users average 33 and 30 years old, respectively, while Li Auto’s i6 users are under 30.

A knowledgeable source pointed out a problem: “Although Audi is pushing a youth-oriented strategy to improve the age structure, most display cars at dealerships are black or white—colors young users don’t prefer. Audi says this is based on research, but it’s clear they lack on-the-ground insights and don’t listen enough to frontline sales feedback.”

Additionally, Audi’s electrification efforts in China have been underwhelming. In 2025, Audi returned to the top of the luxury fuel vehicle sales chart in China, but pure electric vehicle sales remain weak, with less than 15% market penetration. This has led to underutilized capacity at the PPE super-plant, with factory workers’ incomes shrinking by up to 70% due to sales targets.

In early 2026, the German luxury trio began significant price cuts, trying to trade profits for volume. The new Audi A6L pre-sale price was cut by ¥100,000 compared to the previous generation. BMW also slashed prices on 31 models in early 2026 amid dealership closures. In February, Mercedes-Benz reduced prices on four key models, including C-Class and GLC. These widespread discounts have eroded the brands’ premium positioning.

Despite these difficulties, BMW, Mercedes-Benz, and Audi have increased investments in China over the past three years, focusing on electrification and smart technology.

In April 2024, BMW announced a ¥20 billion investment to upgrade its Shenyang plant, including localizing the new generation BMW iX3 Long Wheelbase at the Shenyang Dadong factory. The new iX3 will debut globally at the Beijing Auto Show in April, with digital features co-developed by global and Chinese teams. BMW plans to launch about 20 new models in China this year, with the new iX3 being the most localized.

Mercedes-Benz has upgraded its China R&D center from “local adaptation” to “global R&D engine.” Over the past five years, Mercedes has invested ¥10.5 billion in China, building the most comprehensive R&D team outside Germany. The brand plans to introduce over 15 new or facelifted models in China this year, including nine equipped with intelligent driver-assistance systems developed in partnership with Momenta. Over the next three years, Mercedes aims to launch more than 40 new models in China.

Volkswagen, Audi, and partners have announced investments totaling €15 billion, including the PPE super-plant for pure electric models and a €2.7 billion upgrade for the new Q5L production line in 2025. 2026 will be another “product year” for Audi in China, with plans to introduce eight new models based on local platforms and electrification strategies.

While sales decline and profits are affected, the German luxury trio continues to expand investment in China. The deeper reason is that local brands are closing the gap through electrification and smart tech, offering consumers high value for money.

From entering China to “Going Global from China”

In the previous phase, BMW, Mercedes-Benz, and Audi focused on expanding in China, often relying on local managers or “China experts” as the most sensible choice.

For example, during Duan Jianjun’s 12 years at Mercedes, sales grew from about 280,000 in 2014 to 774,000 in 2022—Mercedes’ peak in nearly a decade. China has been Mercedes’ largest single market for over ten years.

But as China’s auto market shifts into a stock era, with new energy vehicles replacing traditional fuel cars, and consumer awareness of intelligent features approaching or surpassing brand perception, the era of steady profits from “small updates every three years, major updates every five” is over. The German luxury brands are “forced” to change their approach.

Faced with fierce competition, BMW, Mercedes-Benz, and Audi are increasing their investments in China, establishing local R&D centers, and integrating local intelligent solutions (including Huawei and Momenta), shifting from defense to offense.

“One thing they need now is managers with both a global perspective and experience in electrification and smart tech, who also deeply understand the corporate culture. Because at this stage, China’s auto industry is no longer just about technology import; it’s also about technology export. The old ‘in China for China’ has a new layer—‘in China for the world.’ZF, Hyundai, and BMW have all mentioned this,” said a long-time industry insider.

The three successors to Gao Xiang, Duan Jianjun, and Andreas Kahl—Ke Ruichen, Li Desi, and Daniel Weissland—are all products of this environment.

Compared to Gao Xiang, who can sing in Chinese, Ke Ruichen has no China market experience; he is more familiar with European markets, especially Scandinavia and Germany. He previously managed BMW MINI sales in Germany and sales in the Nordic countries. Before taking over from Gao, he was responsible for BMW Group’s overall operations in Germany.

During his tenure leading BMW Germany, he achieved remarkable results, increasing both sales and profits, and raising BMW’s electric vehicle penetration in Germany to 20%, 2.1 percentage points above the global average.

He led the marketing of the new generation BMW iX3, which received over 30,000 orders within six weeks of launch in Germany. The model will soon be launched and localized in China—BMW sees it as the “answer” for China, aiming to rekindle consumer interest through localized R&D and electrification.

BMW’s personnel announcement states: “In a complex and changing market environment with increasing competition, effectively applying regional management experience in key markets is crucial… Ke Ruichen will leverage mature sales management skills and international experience to usher BMW Group into a new phase of development in China.”

Li Desi, who replaces Duan Jianjun, has spent a quarter of his career in China. Unlike Duan, he has also served as Vice President of Sales, Marketing, and After-Sales for Smart Global, and as Chairman of Smart Europe’s Supervisory Board. He previously led Mercedes-Maybach’s global business and was responsible for global sales of Mercedes-Maybach, AMG, and G-Class SUVs.

He is also a “China expert,” but more importantly, he has driven Smart’s electrification and global expansion, aligning with Mercedes’ next phase of luxury electrification and “focusing on luxury.”

Daniel Weissland, a veteran with nearly 30 years at Audi, has long worked in North America, responsible for Audi and Volkswagen’s operations in Canada since 2015 and 2017. In 2019, he became President of Audi USA, leading the brand’s largest product rollout in history.

Audi’s reform efforts in China are also reflected in two areas: first, SAIC Audi’s original localization project for the A7 Sportback, which was undergoing winter testing last year, has been transferred to FAW-Audi; second, future pure electric and fuel models based on the PPE platform (including imports) will be managed by FAW-Audi, ending the interregional competition between North and South Audi.

This internal integration is seen as a key move for Audi’s accelerated electrification in China.

However, a senior industry insider who has long interacted with Mercedes and Audi said that the shift from relying on local managers and “China experts” to cultivating internal talent with international experience and electrification expertise aims to improve efficiency during the stock and electrification transition. It also marks a new cycle where German luxury brands are moving from managing China to learning from China and exporting to the world. The key to this new approach is whether the new Chinese market leaders can truly understand China deeply. “They may communicate better with headquarters, but how can they surpass their predecessors in truly engaging with the Chinese market?”