Rolls-Royce China
A visitor takes a selfie inside a Rolls-Royce presented during the Auto China 2016 auto show in Beijing April 25, 2016.Reuters/Damir Sagolj

Those planning to buy luxury car in China worth over 1.3 million yuan ($188,852) and above will have to pay an extra 10 percent tax from December 1. The Chinese government has added this extra burden to luxury car buyers to rein in lavish spending and to reduce emissions, the Finance Ministry has said.

The new tax structure is expected to take a hit in the sales of luxury carmakers such as BMW, Mercedes Benz, Audi, Ferrari, Aston Martin and Rolls Royce. However, automakers have played down the impact as the tax hike would only impact a small number of models. Company executives are also confident that Chinese buyers are unlikely to be put off by a relatively marginal price hike on already expensive cars.

The move is a part of President Xi Jinping's move to cut down luxury expenses. China has been cracking down on ostentatious shows of wealth over the past few years, a drive that has hit domestic luxury sales from premium alcoholic spirits to handbags, reports Reuters. In addition, Beijing issued new rules saying that top officials should cut down expensive travel and avoid owning fancy cars, Xinhua reported.

"The majority of our business will not be impacted. But because this was just announced yesterday, we are still evaluating to see what impact we might see on our business," a Beijing-based BMW spokesman said. Audi said in a statement that cars above 1.3 million yuan made up less than one percent of its deliveries in China.

Also read
Quick Links