These 4 European automobile giants are going BIG in China as they appear to develop an even bigger foothold in world’s largest market
Chinese cars flooding Europe is a common theme, as car giants from the Far East take on legacy brands with cheap, tech-laden alternatives
But some of Europe’s biggest automotive power players have invested, and are continuing to invest, millions if not billions into China’s car market.
In 2025, Chinese automobiles accounted for 35.6 per cent of the world market share.
The total global car sales were 96.47 million units, and China sold 34.35 million units, a 9 per cent increase year-on-year, according to the China Passenger Car Association (CPCA).
Volkswagen, BMW, Mercedes and Volvo are four of the household marques that are expanding at huge rates in China – the world’s largest car market.
So, what are European car giants doing to take on Chinese automotive players on their own turf? Strategy, investment and product alignment – we take a look.
Volkswagen has one of the most targeted Chinese expansion plans of them all: It’s ‘In China, for China’ strategy
Volkswagen
Volkswagen Group is the second largest car manufacturer in the world by sales, ranking behind Toyota. The Group turned over €321.9billion (£280bn) sales revenue in 2025 and processed nine million vehicle sales.
But to take on the world’s largest car maker, even Volkswagen has had to come up with something big: It’s ‘In China, for China’ strategy.
Through the plan, the Group has been steadily building momentum in China through a new energy vehicle (NEV) product portfolio and locally developed Intelligent Connected Vehicles (ICV) technologies.
VW has also been reinforcing its local R&D capabilities and integrating into the local ecosystem with strategic partnership, not least through its long-term partnership with Chinese AI Smart Tech company and EV maker XPeng, which it entered into in 2023.
Part of VW’s ‘In China, for China’ strategy is the all-electric ID.Unyx 08 SUV – fully tailored to Chinese EV buyer tastes
It will hit the market later this year and has been developed in just 24 months – ‘China speed’
This product development and technological innovation partnership has led to the joint development of two all-electric models already including the new full-size, all-electric ID.Unyx 08 SUV which will hit the market later this year and is fully tailored to Chinese customer needs.
It’s been developed in just 24 months.
VW has a staggering 20 new EVs scheduled to launch in China in 2026 alone.
And even outside China VW is feeling the heat because it is stepping up to the kind of launch level of Chinese brands: on average, the Volkswagen Group is globally launching one new electric car every two weeks this year – something it calls ‘China speed’.
In 2024 Mercedes-Benz Group invested €1.8billion (£94m) with its Chinese joint venture (JV) partner BAIC
Mercedes-Benz
Very recently it was reported by Bloomberg that Mercedes has been holding talks with Chinese car giant Geely – owner of Volvo, Polestar and Lotus – about deepening cooperation to booster the German car group’s vehicle development in China, its largest market.
The partnership would potentially allow Mercedes to shorten development times and lower engineering costs in China and therefore compete against Chinese brands that have faster development speeds and lower prices.
A Mercedes spokesperson told Bloomberg that the company ‘is continually reviewing ways to make research and development faster, better and more efficient — both in China and globally.’ A spokesperson for Geely declined to comment.
In 2024 Mercedes-Benz Group invested €1.8billion (£94m) with its Chinese joint venture (JV) partner BAIC.
From 2025 Mercedes has been introducing China-specific models, including the E-Class L – a long-wheelbase version
That year Ola Källenius, Chairman of the Board of Management of Mercedes-Benz Group AG, said: ‘China is our most important market and a crucial technology hub for the global automotive industry. China is also a trailblazer for technological innovations and future trends. That’s why we continue to invest in China, expand our R&D and industrial footprint and accelerate the transformation towards electrification, digitalisation, and carbon neutrality.’
Mercedes has been introducing a range of China-specific models, including a long-wheelbase all-electric CLA, a long-wheelbase E-Class, a long-wheelbase GLE SUV, and a luxury electric MPV built on the Van.EA platform.
Mercedes already has an R&D centre in Shanghai and two R&D centres in Beijing.
Chief Financial Officer Walter Mertl told Reuters: ‘With increasing availability of the Neue Klasse, we will see growth in China again’
BMW
BMW is putting its Chinese eggs in the Neue Klasse basket – its new generation of ultra-smart EVs.
‘We are more than competitive with this product,’ Chief Financial Officer Walter Mertl told Reuters. ‘With increasing availability of the Neue Klasse, we will see growth in China again.’
BMW has recently seen tricky times in China, like other European car makers, due to aggressive local competition and less interest from wealthy Chinese drivers due to a downturn in the housing market: BMW’s China sales dropped 15.5 per cent in the first half of 2025.
In 2024 when BMW announced plans to invest 20billion yuan, just over £2billion, in its Shenyang production base in China as part of the marque’s ‘unwavering commitment to the Chinese market’.
BMW has made several long wheelbase models exclusively for Chinese market including the extended 3 series Li and 5 series Li
The BMW X5 Li is 310mm longer than standard X5, which should please Chinese buyers
In total, BMW invested 105 billion yuan (£11.5bn) in the plant to allow for the production of the Neue Klasse EV-only line.
BMW has made several long wheelbase models exclusively for Chinese market including the extended 3 series and 5 series (Li) and X5 Li. In the case of the X5 Li, it is 310mm longer than standard X5.
BMW produces these through its BMW Brilliance Automotive joint venture.
Since 2010 Volvo has been owned by the Geely Group, China’s second-largest private automaker
Volvo
Volvo is a bit of a Trojan horse on this list.
Since 2010 Volvo has been owned by the Geely Group, China’s second-largest private automaker. But between 2021 and 2023, Volvo Cars signed an agreement with its parent Geely Holding to acquire Geely Holding’s stake in the companies’ joint ventures in China.
This made it the first foreign automaker to take full ownership of its car manufacturing plants and sales operations in China.
So, Volvo is a European brand, owned by a Chinese company, but which owns its own manufacturing in China. A bit of a head twister in other words.
The Zeekr X1 shares the same platform as the Volvo EX30, and both car makers are owned by Geely
Volvo has an office, testing space and R&D facility in Jinan, and a state-of-the-art Design Studio Shanghai.
Volvo’s EX30 and EX40 SUVs were originally manufactured before Volvo’s Belgium plant was added to the production plan to avoid EU tariffs on Chinese EVs, and to act as a supply point for the US to avoid the US’ tariffs on Chinese EVs.
The Volvo EX30 is built on Geely’s Sustainable Experience Architecture (SEA) which it shares with the Zeekr X1 (owned by Geely) and the Smart #1 (part owned by Geely).
