BMW, Mercedes among luxury carmakers to cut prices in mainland China amid weaker demand, lower VAT
- Price cuts of around 2.5 per cent come as Beijing prepares to lower VAT rate on manufacturers from 16 to 13 per cent
- Mercedes-Benz, BMW, Lincoln, Land Rover, Jaguar and Volvo announced that they would lower retail prices on their models
A clutch of luxury car brands including Mercedes-Benz, BMW and Volvo have cut the prices of their vehicles in mainland China after the government announced it would lower value-added tax.
The price reductions, amid lacklustre sales in the first two months of this year, added to evidence that the world’s largest auto market is grappling with weaker consumer demand after nearly three decades of sizzling growth.
Chinese Premier Li Keqiang said last week that Beijing would slash the VAT on manufacturers from 16 per cent to 13 per cent on April 1, a move that will eventually benefit consumers as companies lower the prices of finished goods.
VAT is the tax based on the value a company adds to a finished product or service.
The lower rate would lead to about a 2 per cent price cut on finished cars, according to Cui Dongshu, secretary general of the China Passenger Car Association.