The three luxury brands of the tax reform of the Ministry of Finance have not adjusted the retail price of new cars

On May 1st, 2018, the Ministry of Finance and the State Administration of Taxation issued the Notice on Adjustment of Value-added Tax Rate, which clarified that “the taxpayer’s taxable sales activities or imported goods have occurred. The original application was 17% and 11%. At the % tax rate, the tax rate will be adjusted to 16% and 10% respectively." The adjustment of this tax rate has reduced the operational burden of the company. The Mercedes-Benz, BMW and Audi brands of the first tier of the luxury brand have announced the reduction of the official guideline price, which has been passed on to consumers. What is the reaction of the second-tier luxury brand Cadillac, Lexus and Volvo? The on-line auto market telephoned and inquired about the above-mentioned brand 400 customer service phone and was informed that: Cadillac, Lexus and Volvo have not adjusted the new car retail price.

First, the second echelon of luxury has not yet followed up "the official drop"

From the “Notice on Adjusting Value-added Tax Rate” issued by the Ministry of Finance and the State Administration of Taxation, the original intention of the tax rate reduction policy can be understood as reducing the pressure on business operations. Some smart companies will also use this adjustment to transform into marketing opportunities. However, according to the online market survey of luxury brands of the second tier, Cadillac, Lexus and Volvo brands have no plans to follow down the official guidance price.

The sales of the above three brands exceeded 100,000 in 2017. From January to April this year, the sales volume reached 81,000, 53,200 and 39,200 vehicles respectively. From May to December of this year, the average sales price of brand new cars of 580,000 cars per brand and the average new car guide price is reduced by 1,000 yuan, which can increase operating income by at least 100 million yuan.

Second, the first tier luxury brand down the guide price - let consumers billions of dollars

For the BBAs (Benz, BMW, Audi) of the luxury brand first tier, the pricing already includes a certain brand premium. In response to the new VAT rate, the official guidance price of all the cars is reduced synchronously and can be It is to transfer the benefits originally provided by the state to the company to the consumer. The Mercedes-Benz, BMW, Audi three brands in the Chinese market, the annual sales of 1.5 million units, in accordance with the reduction of bicycle profits of 1,000 yuan calculation, the entire first-tier luxury brand to the Chinese market's non-profit also will exceed at least 1.5 billion.

Of course, for each company, the VAT adjustment is not aimed at the consumer. Manufacturers can choose whether or not to reflect new value in their products.

For Mercedes-Benz, BMW, Audi (in addition to Jaguar Land Rover, Porsche and other luxury brands) that have already adjusted the selling price of the terminal, while maintaining the premium of the original brand, lower terminal prices will also be reflected in the market competition. After the implementation of the national tax reform policy, the brand adjusted the official guide price, on the one hand, to further enhance the brand's awareness and reputation, and on the other hand it can also gain the effect of brand marketing in the first place.