China's sales of luxury cars drop by 70% in Oct

Shanghai, October 27 (Gasgoo.com) Since September 1 when the higher sales tax on big cars took effect in China, many orders for high-emission luxury cars have been canceled or delayed, and sales in these two months have dropped by more than 50% year on year (y/y) in big Chinese cities, said xinhuanet.com today. Some brands even are seeing their sales fall by as much as 70% y/y this month.

In addition to the sales tax hike, other negative factors such as the global financial crisis, gloomy stock market, and weakening consumer confidence have also plunged the luxury car market into an early off-season of winter, said some industry analysts. As long as the three mentioned factors persist, the sales of luxury cars will see no sign of quick recovery and this trend is likely to carry on to next year.

Many customers have delayed or given up their purchase of big luxury cars that have prices pushed up by the sales tax hike. The BMW cars of big engines have been sharply marked up: a 4.8L BMW X5 has a price increase of nearly 400,000 yuan ($58,600), bringing its price to double that of a 3.0L BMW X5. This high price has kept prospective buyers at bay, and now the car viewers (let alone car buyers) in a 4S store often number less than the sales staff in it.

A Chengdu-based sales manager of Infiniti cars said that his store achieved sales increase by 100-200% y/y in July and August this year, but the booming business froze suddenly in early September and the icy market shows no sign of thawing these days.

Apart from the slump in the sales of big luxury cars, the sales of medium-size luxury cars priced at about 500,000 yuan, such as BMW 5 series, Lexus ES350, Infiniti M35, Benz E280, Audi, A61 and Cadillac GTS, have also dropped considerably.