The levy on 'super luxury' cars is intended to tone down the lavish sending habits of China's ultra-wealthy.

Luxury automakers in China are set to be hit with a 10 percent tax increase intended to reduce conspicuous consumption and encourage buyers to choose more fuel efficient cars.

According to Automotive News Europe, the tax, introduced on December 1, applies to all cars with a retail price of more than 1.3 million yuan ($189,000). Various Aston Martin, Bentley, Ferrari, and Lamborghini models fall into that bracket.

The Ministry of Finance said the surcharge on “super luxury” vehicles in intended to “guide reasonable consumption” and reduce emissions.

China’s communist government, led by President Xi Jinping, has been attempting tone down the lavish spending habits of the country’s growing band of high net worth individuals.

Cui Dongshu, secretary-general of the Passenger Car Association, said: “The tax increase is a display of the government’s attitude of advocating frugality. The increase in taxes on luxury cars may help make the extension of the small-car tax cut more likely given it is in line with the government policy of promotion cars with better fuel economy.”

Automakers sought to play down the impact of the levy, saying it would only impact a small number of models and that buyers willing to drop such large sums on a car would probably not be put off by a relatively small increase in the cash price.

BMW and Audi pointed out that only a small fraction of their models would be affected.

In recent years, many luxury automakers have been altering their lineups to cater specifically to the Chinese preference for large sedans and SUVs. That, at least in part, played a big part in Bentley’s decision to launch its controversial Bentayga SUV; Rolls-Royce and Lamborghini are following suit within the next couple years, as well. Other automakers produce long-wheelbase versions of their sedans as many Chinese owners prefer to driven, rather than drive.

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Source: Automotive News Europe

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