by China Introduces New Luxury Car Tax
The Chinese government has introduced an additional tax on luxury cars, which now applies to a larger number of models. Previously, this tax only applied to internal combustion engine cars priced from $182,600, but now the threshold has been lowered to $126,400, and electric vehicles are also subject to taxation. This may hit foreign brands such as Mercedes and Porsche, which sell premium models in China.
The new tax is calculated from the final price of the car, including additional equipment, and is paid at the time of purchase. Among the models that now fall under the tax are the Mercedes EQS (from $126,900), S-Class (from $134,100), and Porsche Taycan (from $127,900).
Impact on the Luxury Car Market
Sales of premium cars in China are already declining: in the first half of 2025, models priced over $140,000 lost almost half of their demand. Experts attribute this to economic uncertainty, which is forcing buyers to choose more affordable options.
According to the China Automobile Dealers Association, in the first half of 2025, only 37,000 cars fell under the new tax, with almost half of them being Mercedes models.
The total volume of car sales in China during this period amounted to 15.7 million units, which is 11.4% more than in 2024. Although luxury imported models make up only a small share of the market, their high margins make the tax changes significant for manufacturers.
Local analysts believe that the new tax is unlikely to affect the decisions of wealthy buyers, as imported cars in China are already subject to high duties. However, for foreign brands, this could mean additional costs and increased competition from Chinese manufacturers, who offer similar models at lower prices.
