Dealers store up imported cars ahead of tax rise

Shanghai, August 15 (Gasgoo.com) Dealers of imported cars with high emissions in China are storing vehicles ahead of the tax rise effective on September 1, and prices of existing cars are already being sold at a higher price than usual, local Chinese media reported today.

A BMW dealer in Hangzhou, capital city of eastern Zhejiang province, said the tax rise was prompting potential buyers to push back their planned purchases. As a result, the dealerships were storing some vehicles and stopping its promotional activities designed to attract clients.

Some imported car brands, such as Benz, BMW, Audi and Lexus, have their selling prices up almost simultaneously after the official announcement from China's Ministry of Finance to raise tax on big cars. The price of Benz S600, for example, rose by 120,000 yuan ($17,486) in Hangzhou.

The Ministry of Finance and State Administration of Taxation announced Wednesday to lower tax rate from 3% to 1% on cars with smallest engines (less than or equal to 1.0 liter in displacement), while doubling the rate from 20% to 40% on the largest (more than 4.0 liters). Tax on vehicles with engines sized from 3 liters to 4 liters will be 25%, up from the current 15 percent.