- Title: China imposes extra tax on super-luxury cars
- Date: 2nd December 2016
- Summary: BEIJING, CHINA (FILE - APRIL 20, 2014) (REUTERS) VISITORS AT BEIJING AUTO SHOW VISITORS STANDING IN FRONT OF FERRARI EXHIBITION BOOTH VARIOUS OF FERRARIS ON DISPLAY
- Embargoed: 17th December 2016 12:08
- Keywords: China tax luxury cars supercar
- Location: BEIJING / SHANGHAI, CHINA
- City: BEIJING / SHANGHAI, CHINA
- Country: China
- Reuters ID: LVA0025B6YJB9
- Aspect Ratio: 16:9
- Story Text:China has imposed an extra 10 percent tax on super-luxury cars costing 1.3 million yuan ($188,852) and above, in a bid to rein in lavish spending and reduce emissions, the Ministry of Finance said on Friday (December 2).
The new levy will potentially affect pricing for top of the range models from carmakers such as BMW, Daimler, Mercedes-Benz and Audi, as well as super high-end brands like Ferrari, Porsche and Rolls-Royce.
Carmakers played down the impact, saying the tax hike would only impact a small number of models, while executives said wealthy Chinese buyers were unlikely to be put off by a relatively marginal price increase on already expensive cars.
China has been cracking down on ostentatious display of wealth over the past few years, spearheaded by President Xi Jinping, with measures that have hit domestic luxury sales from premium alcoholic spirits to handbags.
"I think the reason why we're seeing this ten percent ultra-luxury tax being levied now is - it's a message. It's a message to the wealthy, it's a message to perhaps government officials who have been misusing funds that they are being watched," said James Chao, Asia-Pacific managing director with market analysts IHS Automotive.
On Thursday (December 1) the official Xinhua news agency said Beijing had issued new rules instructing top officials to cut down on expensive travel and avoid owning fancy cars.
The tax hike comes as the price of luxury cars has been falling steadily in China, partly due to consumer criticism that global car brands have been overcharging Chinese buyers.
Analysts and carmakers, however, said the higher tax rate would probably only have a limited impact on mainstream luxury brands.
"I don't think the effects of this will be noticeable. Maybe with certain manufacturers but the effects, I think, still will be minimal. And the reason why is that the individuals who purchase these vehicles at this price range, a 10 percent increase, will be unnoticeable," said Chao. - Copyright Holder: FILE REUTERS (CAN SELL)
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