Tax raised on high-end cars
December 5, 2016 Category Automotive, Weekly
China has imposed an extra 10% tax on ultra high-end cars costing over CNY1.3 million, such as Lamborghini and Ferrari. The new tax was intended to “guide rational consumption” and promote energy-efficient vehicles, the Ministry of Finance said in a statement. Cui Dongshu, Secretary General of the China Passenger Car Association (CPCA), said: “The tax increase is a display of the government’s attitude of advocating frugality.” China already taxes imported vehicles at a high rate, slapping a 25% tax on all foreign cars shipped to China. The duties have driven overall car imports down two years in a row, with 850,000 vehicles imported in the first 10 months of the year, down 6.4% from 2015. But ultra high-end brands such as Ferrari have done well, with the Italian sports-car maker seeing a 26% surge in its second-quarter sales this year, with 160 units delivered. The new tax will potentially affect pricing for top of the range models from carmakers like BMW, Mercedes-Benz and Audi, as well as super high-end brands like Ferrari, Aston Martin and Rolls-Royce. Car company executives said wealthy Chinese buyers were unlikely to be put off by a relatively marginal price hike on already costly cars. “The majority of our business will not be impacted,” a Beijing-based BMW Spokesman said.
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