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Perks galore in rush to sell green cars

Dealers offer discounts and promotions on European models to push sales before the end of tax waivers as new emission rules take effect

PUBLISHED : Monday, 11 March, 2013, 12:00am
UPDATED : Monday, 11 March, 2013, 4:30am

Hong Kong dealers are offering discounts and promotions on European cars with "green" approvals in a race to sell them before buyers lose their entitlements to tax waivers of up to HK$75,000 by April 1.

The promotions, which began three months ago after the government said it would amend a tax incentive scheme to end the waiver of the first registration tax on nearly all popular European models such as Audi, BMW and Mercedes Benz, helped boost sales of these brands by double digits in the past two months.

Audi sales leapt two to three times in the two months as the firm had started stocking up on green-approved vehicles as early as November last year to capture the foreseeable growth.

Mercedes Benz, despite its more laid-back approach, saw sales jump 15 per cent, while BMW reported an increase of 77 per cent in deliveries in January, which reflected sales made one or two months ago.

To tighten control on roadside emission, the bar of "green vehicles" was raised from cars with an emission level of below half the maximum rate to 75 per cent below the cap, slashing the number of green cars to 29 this year from 148 last year.

With 73 out of 74 European models set to lose their entitlements to the tax break - including BMW's 3 and 5 series, Audi's A3, A6 and A7, Mercedes' E-class and Volkswagen's Golf 1.4 and Jetta - sales in the second quarter are expected to cool. That is why more aggressive players such as BMW said it would offer up to HK$30,000 discounts to buyers who placed orders for their obsolete green models this month.

"The April 1 deadline applies to the time when the car is licensed, not when it is purchased, so buyers who place orders now may not be able to enjoy the tax waiver," a sales executive at the BMW showroom said. "But we will cover some of their losses."

Meanwhile, Volkswagen decided to focus on plugging its new Golf 7 model, reducing the price to the same level as the old "green" model to boost sales.

"Our strategy is to bring in new models. We will also demand the manufacturer make green models that fit the new requirement for tax incentives," said Thorsten Jaede, Volkswagen's managing director in Hong Kong. "That said, the new requirement is very stringent on the level of nitrogen oxide, although the global concern is on carbon dioxide."

One reason why just one European model remains qualified as environmentally friendly vehicles under the new regime, while 28 of the 74 Japanese cars do, is European cars usually have bigger engine sizes than their Japanese rivals, and this puts them at a disadvantage in the equation that considers emission levels in proportion to engine sizes.

Jaede said premium cars, which were preferred over medium-sized ones in the past when they both enjoyed the tax incentive, were now in a disadvantaged position.

But Michael Lee, the managing director of Mercedes Benz's sole distributor Zung Fu, said buyers who favoured European cars would still go ahead even without the tax cut.

Audi, Mercedes Benz, BMW and Volkswagen all said the impact of the tax move would be short-lived and should have little effect on their sales this year.

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