China Changes Tax Rules for Luxury Cars
China has lowered the price limit for its 10% luxury car tax. Earlier, the tax applied to cars costing over CNY 1.3 million. Now, it will apply to cars priced at CNY 900,000 or more. This new rule will start from July 20, 2025.
Over Half the Market Affected
This change will impact 54% of the ultra-luxury car market in China. In the first half of 2025, 37,000 such cars were sold. This is 49% less than the same period last year.
New Energy Cars Included
The 10% tax will now apply to electric cars, fuel cell cars, and new energy vehicles. The tax will be added when the car is sold to the customer.
Top Brands in Trouble
Mercedes-Benz has the largest share of the market with 43%. Jaguar Land Rover (JLR) holds 23%, and Porsche has 18%. JLR is expected to be hit hard because many of its Range Rover and Defender models are priced between CNY 900,000 and 1.3 million.
Prices Likely to Go Up
Because of the tax, prices of many models will rise by around 10%. This could cause buyers to delay their purchases.
Big Discounts Offered
To keep their market share, foreign brands like Porsche and Maserati are now offering big discounts on their cars in China.
China Still Important for JLR
China gives only a small part of total revenue to JLR. But the market is important for its brand image and long-term plans.
Used Cars Not Taxed
Second-hand luxury cars will not be taxed under the new rule. This might increase their demand in the coming months.
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