China slashes luxury car tax threshold

China has lowered the threshold for the luxury tax on automobiles from the previous 1,3 million yuan (155.000 euros) to 900.000 yuan (107.000 to 115.000 euros). This measure not only affects vehicles with internal combustion engines but also, for the first time, includes electric and fuel cell vehicles. The tax, amounting to ten percent of the final selling price including all special equipment, is due in addition to any import duties and consumption taxes.

For German premium manufacturers such as Mercedes-Benz, BMW, Porsche, and Audi, this means significant profit losses and strategic challenges, as reported by Focus. Mercedes-Benz must expect losses with its S-Class, EQS, G-Class, as well as Maybach and AMG models. Porsche faces tax disadvantages with the Taycan, Panamera, and top-of-the-line Cayenne models. At BMW, the changes affect the 7 Series including the electric i7, the X7, and various M models. Audi is comparatively less affected – only the RS6 and the exclusively for China manufactured A8L Horch fall under the new regulation.

The surprising announcement of the tax change just 48 hours before its implementation is interpreted by observers as a possible retaliation for the import tariffs imposed by the EU on Chinese electric vehicles. However, the Chinese Ministry of Finance justified the measure with the promotion of »rational consumption« – a euphemism for curbing luxury spending, it is said.

At the same time, the regulation specifically strengthens Chinese manufacturers. Almost all models from manufacturers such as BYD, Nio, Geely, and Huawei are below the new threshold and are thus exempt from the luxury tax.

MK