Chinese carmakers challenge Europe’s luxury brands

Chinese automakers are targeting Europe's lucrative luxury car market, betting advanced technology can help them compete with established German brands.China’s automakers are betting European drivers will embrace a new form of premium motoring centred on technology rather than heritage, with brands such as Changan’s Avatr and BYD’s Denza pitching what they call “intelligent luxury”. Having rapidly gained share in Europe’s mainstream car market with affordable models and the latest tech, Chinese carmakers now have their sights on a bigger prize: the continent’s highly lucrative premium segment. At this week’s Paris car show, Chinese brands showcased premium vehicles packed with advanced driver-assistance systems, rapid charging and comfort features, hoping to persuade buyers to choose unfamiliar Chinese badges over established luxury names. But winning over Europe’s premium buyers is likely to take time. “You need to be in this market long enough to build up your presence and credibility,” said Zheng Yeqing, a vice president at Chinese electric vehicle maker Xpeng 9868.HK, which launched in Europe in 2020 and saw its sales there more than double to more than 29,000 cars in the first eight months of 2026. “It takes persistence.” Europe’s premium segment is dominated by Germany’s BMW BMWG.DE, Mercedes-Benz MBGn.DE and Volkswagen’s VOWG_p.DE Audi, whose decades of brand heritage carry far more weight with European buyers than they do in China, where consumers place greater emphasis on technology features. With domestic vehicle sales in China falling 20% in the first half of 2026 and competition intensifying, Chinese automakers increasingly need the margins that premium vehicles can deliver. Europe is the obvious battleground. Chinese brands are effectively shut out of the US, the world’s most lucrative car market, while BMW, Mercedes, Audi and Porsche P911_p.DE sold almost 2 million vehicles in Europe in the first nine months of this year alone. Chinese brands such as Geely’s GEELY.UL Zeekr have already gained share from German premium rivals in China with lower-priced models packed with technology features. Avatr 000635.SZ unveiled an electric premium sedan and SUV in Paris that will start at around €60,000 ($67,400) and feature rapid charging and comfort extras including a massager in every seat. Justin Li, who heads the all-electric brand’s overseas expansion, said Avatr estimates that Europe represents 72% of sales of cars priced above $50,000 outside the US market. “If we want to be a premium brand, if we don’t enter Europe … we don’t really win,” Li said. Technology challenges traditional luxury Typically, a German premium car launch includes images celebrating a brand’s heritage, such as an early 20th-century craftsman carefully shaping an elegant piece of wood trim. The Chinese premium car launches in Paris were different. During Aito’s unveiling of four electric SUVs, Seres 602127.SS Vice President Clifford Kang, representing the brand’s parent company, highlighted its “intelligent technology”. An accompanying video showed Aito vehicles automatically swerving to avoid obstacles or carrying a tower of full champagne glasses on the hood without spilling a drop. Aito’s philosophy, Kang said, is “intelligence redefining luxury”. Brad Kuntz, a partner at consultancy Grant Thornton Stax, said Chinese automakers are reshaping what luxury means for some consumers. “You’ve got that old bespoke luxury of European cars of years ago,” he said. “But in the EV world you’ve got more of the elegance being built in from a technology standpoint.” European premium brands are watching the newcomers closely. “Audi is confidently embracing growing international competition, including from China,” a spokesperson said. “It is the task of European policymakers to ensure fair competitive conditions in Europe.” Top-end brands such as Volkswagen’s Bentley appear unfazed. During the unveiling of Bentley’s first EV last month, CEO Frank‑Steffen Walliser told reporters that real luxury comes from the “heart of Europe” and is irreplaceable. Speaking on condition of anonymity, an executive at a major Chinese automaker acknowledged the challenge. “Deep down in my heart, we still have a gap between us and those European luxury brands,” he said. But he added that Chinese automakers should be able to catch up “within a decade or two”. Chinese brands plan further European expansion For now, Chinese premium sales remain a tiny share of Europe’s market, though they are growing rapidly. Zeekr’s European sales more than tripled to 9,525 vehicles in the first nine months of 2026 from 3,025 a year earlier. Having entered 22 European markets, Zeekr plans to expand into another eight this year, European CEO Lothar Schupet said. “Our starting point where we are now is very strong and we will keep on accelerating,” he said. Avatr’s Li said the brand plans a gradual expansion across Europe, starting with Spain, Britain and Denmark in 2027, followed by Germany and a handful of other countries in 2028. “We have only one chance to get this right,” he said.