China’s Luxury Car Tax Shift: Impact on Porsche, Land Rover & Mercedes

On July 20, 2025, China adjusted the consumption tax on ultra-luxury cars, lowering the threshold to a retail price of 900k yuan (excl. VAT). This has resulted in ultra-luxury cars with a domestic retail price (incl. VAT) ranging from 1,017k yuan to 1,469k yuan being included in the levy scope.

Among the models newly included in the consumption tax (1,017k – 1,469k yuan), the top three in retail volume in H1 2025 are Mercedes-Benz, Land Rover and Porsche. However, such models account for only 2.9% of Mercedes-Benz’s total sales, while for Land Rover and Porsche, the proportions reach 26.2% and 29.9% respectively, which will have a significant impact.

Notably, the key models of the three brands affected by the lowered consumption tax threshold are Mercedes-Benz GLS, Range Rover and Porsche Panamera, with H1 2025 sales of 4.8k, 7.3k and 5.7k units respectively. The levy of consumption tax will inevitably cause sales fluctuations for these models.

Based on data fitting and market conditions, a 10% consumption tax on the Range Rover, GLS and Panamera would lead to sales declines of 15.2%, 9% and 19.6% respectively. The GLS decline would have a minor impact on Mercedes-Benz, while the Range Rover and Panamera would cause Land Rover and Porsche’s overall sales to drop by 4.86% and 4.95% respectively.