Mercedes Benz and BMW revealed that they will implement lower sale prices for their vehicles sold in China. The announcement of cheaper rate came after the China government stated that it will cut the nation's value-added tax or VAT on April 1.
The said leading car manufacturers of Germany notified the public about their lower prices by posting notes on Chinese social media sites. Then again, it should be noted that Mercedes Benz and BMW will only apply discounts on certain models.
"The reductions mark the company's active response to the national VAT adjustment notice," BMW stated in a post on China's popular messaging app, WeChat.
The move to reduce the value-added tax on vehicles was a result of economic slowdown. And with the lower prices of BMWs and Mercedes Benz units, sales are expected to shoot up and eventually help improve China's dwindling automobile market.
As per Reuters, BMW will impose cheaper rates for locally made and imported car units. It was stated that the China-made BMW 3 series along with BMW 5 series, BMW X5 and BMW 7 imported vehicles are all included in the list that will be sold at discounted prices.
On the other hand, the BMW 320Li M model will be put up for sale at the suggested retail price of ¥339,800 or US$50,620, an amount that is cheaper by ¥10,000. Its original price was ¥349,800.
As for the Daimler AG-owned vehicle company, Mercedes Benz, also declared it will offer price cuts on some of its model units. The discounts will take effect immediately, ahead of China's April 1 VAT reduction. Price drop for select Benz models was said to range from ¥10,000 to ¥40,000.
Meanwhile, China announced the cut on VAT on March 5. Chinese Premier Li Keqiang unveiled the structural tax cut plans and its general benefit at the 13th National People's Congress in Beijing.
Asia Times reported that China will reduce VAT on most business sectors. In the manufacturing arena, the value-added tax is set to go down by three percent which means from 16 percent, it will be down to just 13 while in the transportation and construction department, it will go from 10 to 9 percent. Finally, this new tax scheme is part of China's efforts to lessen tax burdens on small businesses as well as the manufacturing industry.
