Lux­ury-car sur­tax

Move aims to curb lav­ish spend­ing, cut emis­sions

China Daily (USA) - - FRONT PAGE - By LI FUSHENG li­fusheng@chi­

China is levy­ing an ad­di­tional con­sump­tion tax on su­per lux­ury cars to curb lav­ish spend­ing as well as au­to­mo­tive emis­sions. But an­a­lysts said the move is un­likely to have a ma­jor ef­fect on car sales.

Start­ing on Thurs­day, cars with a price tag of 1.3 mil­lion yuan ($189,000) and above have had an ad­di­tional 10 per­cent tax levied, the Min­istry of Fi­nance said.

That is, at least an ad­di­tional 130,000 yuan.

The move is to “guide rea­son­able con­sump­tion, lower emis­sions and save en­ergy”, ac­cord­ing to the min­istry.

Bent­ley Mo­tors China said in a state­ment that it re­spects and will abide by the ad­di­tional tax pol­icy, but “at this stage, it is too early to as­sess the full im­pli­ca­tions on our op­er­a­tions”.

As­ton Martin China said the pol­icy may have some im­pact on the brand’s per­for­mance in China in the near fu­ture, but the long-term ef­fect may take time to ap­pear.

“We con­stantly ad­just to spe­cific con­di­tions in the mar­kets in which we do busi­ness, and will do so for this tax­a­tion change in China,” the Bri­tish brand said in a state­ment.

John Zeng, man­ag­ing di­rec­tor of L MC Au­to­mo­tive Con­sult­ing Shang­hai, said the new move is “a lit­tle bit too mild” and­will not af­fect the sales per­for­mance of lux­ury brands such as As­ton Martin, Bent­ley, Fer­rari and Rolls-Royce.

“They­have a rel­a­tively sta­ble cus­tomer base and those who can af­ford a 1.3 mil­lion yuan car would not mind pay­ing an ex­tra 10 per­cent,” said Zeng, adding that a tax of less than 30 per­cent or even 40 per­cent would not yield the de­sired re­sults.

Cui Dong­shu, sec­re­tary­gen­eral of the China Pas­sen­ger Car As­so­ci­a­tion, said the tax hike is the lat­est move in the coun­try’s struc­tural re­form, which is a sign of the gov­ern­ment’s in­ten­tion to stim­u­late mass con­sump­tion while curb­ing the con­sump­tion of lux­ury goods.

But, he said the­move’s ef­fect on the over­all auto mar­ket would be neg­li­gi­ble due to the lim­ited sales of such cars.

Most su­per lux­ury brands do not re­lease their sales fig­ures, but statis­tics quoted in me­dia re­ports say that Bent­ley Mo­tors sold 1,600 cars in China last year, while Fer­rari de­liv­ered 673 units.

In the same year, 24.6 mil­lion cars were sold in China, the world’s largest auto mar­ket since 2009.

Many su­per lux­ury car­mak­ers have been eye­ing China as one of their most im­por­tant mar­kets.

Those who can af­ford a 1.3 mil­lion yuan car would not mind pay­ing an ex­tra 10 per­cent.” John Zeng, man­ag­ing di­rec­tor of LMC Au­to­mo­tive Con­sult­ing Shang­hai


Vis­i­tors are at­tracted by a lux­ury car model at an auto show in Bei­jing. Cars with a price tag of 1.3 mil­lion yuan ($189,000) and above will have an ad­di­tional 10 per­cent tax levied on them from Thurs­day.

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