China has launched a 10 percent consumption tax on luxury cars as of Dec. 1.
The tax applies to sedans, SUVs and limos sold at 1.3 million yuan (180,000 U.S. dollars) and above.
A business insider predicts that the market will make obvious responses to the higher taxation, according to the National Business Daily.
The source also told the newspaper that this new policy would mainly affect imported cars in the Chinese market, as almost all luxury cars sold at 1.3 million yuan and above in China are imported.
Sales of imported vehicles in the Chinese market have been on a declining streak this year.
Datas show that the sales dropped 3.9 percent year on year in the first ten months of 2016.
There were also fewer cars imported from Jan. to Oct., down 6.5 percent year on year.
That figure has continued a trend of declining from last year, which saw a 25 percent year-on-year drop in car imports.
Analysts are expecting that luxury car dealers would have an even colder winter in the final weeks of 2016.
New tax reform
China has been adjusting its consumption taxes since 2014.
Authorities are aiming to impose taxes on luxury articles and products that are considered energy-intensive and highly polluting.
Batteries and industrial paint were levied consumption taxes last year, when the taxes for cigarettes were also raised.
At the same time, taxes for daily consumption goods have been exempted, such as those on alcohol, tires and low-emission motorbikes.