Why 2025 is a make-or-break year for Volkswagen, Mercedes-Benz, Audi and Porsche, but BMW could show them the way | Analysis
By Samuel Irvine · 03 Mar 2025
Everything that could have possibly gone wrong for the German car industry has.Skyrocketing energy prices as a consequence of the Russia-Ukraine war, rising competition from China, the end of the German government's EV subsidies and dwindling global EV demand have strained the sector unlike ever before.And now, to add insult to injury, US President Donald Trump is vowing to slap 25 per cent tariffs on all cars imported from the European Union to the United States, a critical market for German brands.On our own shores, the impact of these external pressures is clear. In 2024, Volkswagen’s Australian sales fell nearly 17 per cent compared to the previous year, Mercedes-Benz's fell by nearly 18 per cent and Audi's by nearly 20 per cent.BMW is the outlier, with sales remaining steady at a slight 0.6 per cent increase on 2023's numbers, helping the brand maintain its lead as Australia's most popular premium brand by a comfortable margin.So, in a market where the odds appear so heavily stacked against them, how can struggling German car brands reverse their fortunes?Increasingly, it appears, by looking to BMW.Its success over the last 12 months and beyond has proven that the electric car transition can be leveraged to a brand’s advantage.BMW’s early investments in flexible architecture, which allows the same models to be built with internal combustion engine (ICE), hybrid and EV platforms, has seen their EV sales start to command their global growth.Its EV sales grew 13.5 per cent in 2024 as the brand registered 2.45 million global sales and its M performance wing tallied an all-time record of 206,582 sales.Notably, the i4 M50 sedan, an electric version of the mild-hybrid 4 Series, claimed the title of M’s top-selling model for the third year in a row, showcasing the growing appeal for electric performance cars.Volkswagen, Audi, Porsche, and Mercedes-Benz have largely focused on expensive EV-only platforms underscored by new model ranges, a strategy that has struggled to attract traditional ICE vehicle buyers.That said, signs of a strategic transition amongst these brands are beginning to emerge.Mercedes-Benz will launch its all new CLA later this year under both hybrid and electric guises, the latter of which is promising big advancements in range. Recent road testing of its own solid-state batteries could also see it register a major milestone in EV advancement before its rivals.Porsche and Audi have pledged to invest further in their hybrid and petrol technologies, as Porsche mulls a possible return of the petrol Macan under a new-generation model.Both brands’ parent company, Volkswagen, has said more plug-in hybrids are on the way, including for Australia, as the brand readies its ID.1 budget EV hatch for a proposed sub $33,000 price tag in early 2027.BMW, meanwhile, will debut its sixth-generation Neue Klasse EV batteries later this year, which are aiming to improve energy efficiency by at least 20 per cent compared to its current EVs, while offering up to 30 per cent more range.They’re industry-wide strategic shifts that indicate a turning point for the German automotive sector could be on the horizon. That said, any future prosperity will depend on how well its struggling brands can uphold their defining principles of sustained innovation and engineering excellence under increasing pressure.