Mercedes investors warn luxury focus could hamper China recovery

Mercedes plans to overhaul its lineup in China with seven new models by 2027.

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Investors pressed Mercedes-Benz on its recovery plans for China on Thursday, warning that a luxury-focused strategy could hurt the German brand’s chances of winning back Chinese consumers after a slump in sales.

Like rivals BMW and Audi, Mercedes has lost ‌ground in ⁠the world’s ⁠largest car market, struggling to keep pace with fast-moving local brands such as BYD, NIO and Li Auto, which offer tech-laden premium cars at lower prices.

At Mercedes’ annual shareholders’ meeting on Thursday, investors questioned whether the Stuttgart-based automaker was doing enough to meet Chinese standards on technology. “Customers in China today buy innovation, not tradition. Anyone who isn’t a technological leader there becomes a ⁠status symbol of ‌a bygone era,” said Moritz Kronenberger of Union Investment, a top-20 shareholder with about $276 million worth of stock. Kronenberger criticised Mercedes for ⁠developing new products from its luxury S-class range downwards, rather than adopting a more mass-market approach like its Chinese competitors.

Tanja Bauer of Deka Investment, which owns $191 million worth of Mercedes stock, also flagged “the risk of an overly narrow focus on luxury” in her remarks to the meeting.

Mercedes plans to overhaul its lineup in China with seven new models by 2027 and the rollout of advanced driving assistance systems ‌co-developed with Chinese tech firm Momenta.

CEO Ola Kaellenius said this marked the biggest product and technology offensive in the company’s history, backed by local development and ⁠partnerships.

“This enables us to accelerate innovations tailored to the needs of Chinese customers,” Kaellenius said.

Mercedes’ sales in China fell 19 per cent last year to 552,000 vehicles. The decline accelerated to 27 per cent in the first quarter of 2026.

“We have clearly defined, ambitious yet realistic goals for China,” finance chief Harald Wilhelm told investors. “In the medium term, we are aiming for annual sales of 500,000 to 600,000 vehicles in China.”

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