Immediately after the Chinese government released a statement that it has decided to impose a 10% tax on luxury sports cars, buyers rushed to make last-minute purchases before the levy’s implementation.
The Ministry of Finance announced on its website on November 30 that all cars exceeding the 1.3 million yuan ($189,000) price tag will incur the prescribed tax percentage beginning the following day.
In the released statement, the department said it imposed the levy on “super luxury” vehicles in an effort to “lower emissions and save energy” in the country and promote more fuel-efficient vehicles. Observers also see the move as a way of the government to discourage overspending by the country’s rising rich population.
Upon the government’s announcement, luxury car dealers began calling out to their prospective buyers to urge them to buy before midnight to avoid paying extra taxes. The last-ditch effort to sell their inventory did pay off, with some distributors selling as many cars that night as they would typically do in three months, Bloomberg reported.
As buyers may now reconsider buying a cheaper car, luxury car manufacturers are set to absorb a huge impact from the new government provision. The industry has just recently recovered from the corruption crackdown orchestrated by Communist Party chief Xi Jinping which caused a huge sales decline.