Investment Rating - The report does not explicitly provide an investment rating for the automotive industry or specific companies within it. Core Insights - The adjustment of the ultra-luxury vehicle consumption tax aims to promote rational consumption and optimize the tax structure, with the threshold lowered from Rmb1.3 million to Rmb900,000, affecting both new energy vehicles (NEVs) and traditional luxury vehicles [1][9]. - The new tax policy is expected to significantly increase the purchase cost of ultra-luxury vehicles, dampening demand in the Rmb900,000–1.3 million price range, which accounted for only about 20,000 units sold in the first half of 2025 [2][10]. - Domestic NEV brands are presented with a historical opportunity to capture market share in the high-end segment, while imported brands like Porsche face significant challenges due to their reliance on models priced within the affected range [3][12]. Summary by Sections Tax Policy Changes - The consumption tax for ultra-luxury vehicles has been adjusted to include a 10% tax at the retail stage, while NEVs remain exempt from production-stage taxes, leading to a lower overall tax burden for NEVs compared to traditional fuel vehicles [2][11]. - Second-hand ultra-luxury vehicles are exempt from the consumption tax, which may stimulate the used car market and encourage consumers to opt for these vehicles to avoid new tax burdens [2][11]. Market Impact - The new tax policy is expected to further squeeze the market share of high-end imported brands, particularly Porsche, which saw a 49% year-on-year decline in sales in the first half of 2025 [3][12]. - Traditional luxury brands such as Mercedes-Benz and BMW are also anticipated to face pressure, with the pricing center for high-end NEVs expected to shift towards the Rmb500,000–600,000 range [3][12]. Strategic Adjustments - Imported brands must quickly adapt their strategies, either by reducing prices below Rmb900,000 or enhancing vehicle configurations to maintain competitiveness [4][13]. - Domestic brands, benefiting from tax exemptions, have more flexibility in pricing strategies, allowing them to mitigate the impact of the new tax policy through adjustments in vehicle configurations [4][14]. Fiscal Implications - The expansion of the tax base is projected to increase consumption tax revenue, helping to offset declines in ultra-luxury vehicle sales, with consumption tax revenue in the first five months of 2025 totaling Rmb772.9 billion, up 1.6% year-on-year [5][16]. - The policy encourages automakers to focus on the mid- to low-end NEV market, aligning with the trend of rising NEV price ceilings and discouraging blind expansion into the ultra-premium segment [5][16].

Summary of Conference Call on Luxury Car Consumption Tax Policy Adjustment Industry Overview - The conference call discusses the luxury car consumption tax policy adjustment in China, which lowers the tax threshold for luxury cars from 1.3 million yuan to 900,000 yuan, affecting all types of vehicles including fuel, hybrid, and electric cars [1][2][7]. Key Points and Arguments - **Impact on Imported Cars**: The policy significantly affects the imported car market, which has seen a decline from 1.4 million units in 2016 to approximately 700,000 units currently. High-end model sales have decreased, but at a slower rate [3][4]. - **Tax Rate and Market Share**: The new tax policy is expected to have a limited overall market impact, accounting for only 1%-2% of total sales revenue [1][4]. - **Domestic Luxury Cars**: Domestic luxury cars, particularly models from Hongqi, are less affected by the policy. The sales impact is minimal due to their limited market share [5][20]. - **Promotional Discounts**: The promotional discount for luxury cars has increased from 5% to 26%-27%, with some ultra-luxury models reaching 30%. This has led to a decrease in retail prices and a reduction in the number of vehicles subject to the luxury car consumption tax [6][8]. - **Fiscal Pressure**: The policy aims to address fiscal pressure and changes in the high-end car market, filling tax revenue gaps caused by lower terminal prices [7][8]. - **Dealer Challenges**: Dealers face increased pressure due to declining sales and rising discount rates. Imported luxury cars are now more expensive due to increased taxes, leading consumers to prefer domestic electric vehicles [8][19]. Additional Important Insights - **Tax Structure**: Imported luxury cars face a cumulative tax rate of up to 144%, including a 25% import duty and a 40% consumption tax, which significantly raises their market prices compared to domestic models [10][12][13]. - **Market Trends**: The imported luxury car market has seen a notable decline, with brands like Bentley and Rolls-Royce experiencing significant drops in sales. This trend indicates a shift in consumer preference towards domestic high-end models [18][19]. - **Future Market Direction**: The luxury car market in China is expected to continue moving towards domestic production and high cost-performance ratios, as consumers increasingly favor domestic brands over imported ones [21]. This summary encapsulates the key discussions and insights from the conference call regarding the luxury car consumption tax policy adjustment and its implications for the automotive industry in China.