(ECNS) -- At least six foreign premium car brands have announced a cut in retail prices, with the biggest cut of 85,000 yuan ($12,700) for Land Rover vehicles, after China plans to reduce the country's value-added tax (VAT) starting on April 1.
Mercedes-Benz said on March 16 that it will lower its prices in China, ranging from 10,000 yuan to 40,000 yuan on selected models, while prices of Maybach cars will drop by as much as 60,000 yuan.
BMW AG also cut prices on a range of its cars, 60,000 yuan at most, in advance of the upcoming VAT drop, with Volvo, Jaguar and Lincoln announcing similar price cuts on the weekend.
The Government Work Report, delivered by Premier Li Keqiang, said China will reduce tax burdens and social insurance contributions of enterprises by nearly 2 trillion yuan this year. Among such measures, China will reduce the current value-added tax rate of 16 percent for manufacturing and other industries to 13 percent, and lower the rate for such industries as transportation and construction from 10 percent to nine percent.
Discounts also come as China endures a shrinking market for automobiles. Data from the China Association of Automobile Manufacturers showed passenger vehicle sales totaled 22.35 million in 2018, down 5.8 percent year-on-year, the first negative growth for the market registered in 28 years.
Sales of premium brand vehicles increased by nine percent year-on-year, contrary to the fall, but the trend may not continue in 2019. Mercedes-Benz said its sales in February in China dropped by 5.4 percent year-on-year to 40,700. BMW also reported a 4.1 percent decline.