CNBC AI News, July 18th – China’s Ministry of Finance and the State Taxation Administration announced yesterday a significant adjustment to the luxury car tax. The threshold for levying the tax has been lowered from a retail price of 1.3 million yuan (excluding VAT) to 900,000 yuan. The policy is slated to take effect on July 20th, 2025.
The question now is, which automotive brands stand to be most affected by this policy shift? CNBC has consulted with experts at the China Automobile Dealers Association for insights.
According to data provided by Li Yanwei, an expert at the association, sales of ultra-luxury vehicles priced above 1.017 million yuan (equivalent to a pre-tax price of 900,000 yuan plus 13% VAT) totaled 37,000 units in the first half of 2025, representing a year-over-year decline of 49%.
Segmenting by powertrain type reveals a clear dominance: traditional gasoline-powered vehicles accounted for the lion’s share, with 33,000 units sold, representing nearly 90% of the ultra-luxury segment.
This reliance on internal combustion engine (ICE) vehicles within the ultra-luxury market underscores a key vulnerability. These gasoline-powered models are the primary target of the policy revision.
The data suggests that brands with high market concentration will face the most immediate pressure from the adjusted tax threshold.
Mercedes-Benz currently leads the pack with a commanding 48% market share, having sold 16,000 vehicles in the first half of the year.
Land Rover follows in second place, holding a 23% share with sales reaching 8,500 units.
Porsche, Lexus, and Bentley round out the top contenders, possessing market shares of 18%, 8%, and 3%, respectively, translating to sales of 6,800, 3,000, and 1,100 units.
Li Yanwei points out that the previous luxury car consumption tax threshold was set at a pre-tax price of 1.3 million yuan (1.469 million yuan including VAT). The revised policy specifically targets vehicles priced between 1.017 million and 1.469 million yuan (inclusive of VAT).
In the first half of 2025, sales of vehicles falling within this price band amounted to approximately 20,000 units. Compared to the total luxury vehicle sales of 1.45 million units during the same period, this segment represents a relatively small percentage, suggesting a manageable overall impact.
Notably, several domestic Chinese automakers have recently set their sights on the million-yuan luxury car market, introducing models such as the BYD Yangwang U8, Dongfeng Mengshi 917, and Zunjie S800.
The Yangwang U8 boasts a starting price exceeding one million yuan, while the Zunjie S800 comes in below the new 900,000 yuan threshold, potentially positioning it favorably in the evolving market landscape.
Original article, Author: Tobias. If you wish to reprint this article, please indicate the source:https://aicnbc.com/5021.html
