Core Viewpoint - The adjustment of the consumption tax policy for ultra-luxury vehicles in China is a significant change aimed at promoting reasonable consumption and environmental sustainability, with a limited impact on overall luxury car sales [1][2][5]. Group 1: Policy Changes - The new consumption tax policy for ultra-luxury vehicles, effective from July 20, 2025, lowers the taxable threshold to vehicles priced at 900,000 yuan (excluding VAT) and above [1][2]. - The policy exempts the sale of second-hand ultra-luxury vehicles from consumption tax, marking a major shift since the establishment of the tax system in 2016 [2][5]. - The previous threshold for taxation was set at 1.3 million yuan (including tax), which has now been adjusted to reflect market changes [4][5]. Group 2: Market Impact - In the first half of 2025, approximately 20,000 new vehicles fell within the taxable range, representing a small fraction of the total luxury car sales of 1.45 million units during the same period [1][5]. - The luxury car market is experiencing a decline, with sales of new vehicles priced above 900,000 yuan dropping significantly, particularly in fuel and plug-in hybrid models [3][4]. - The market share of imported luxury vehicles has been decreasing, with a notable drop in imports from a peak of 1.43 million units in 2014 to an estimated 700,000 units in 2024 [3][4]. Group 3: Consumer Behavior - The adjustment in tax policy is expected to have a limited effect on the purchasing behavior of ultra-luxury vehicle consumers, who are characterized by strong purchasing power [6]. - There has been an increase in promotional activities among luxury car brands, with discounts reaching up to 30% on certain models, indicating a competitive market environment [4][5]. - The urgency to complete transactions before the new tax implementation has led to a noticeable increase in sales activity in the days leading up to the policy change [5]. Group 4: Tax Revenue and Regulation - The consumption tax is a significant revenue source for the government, with a reported collection of 772.9 billion yuan in the first five months of the year, reflecting a 1.6% year-on-year growth [5]. - The new policy aims to enhance tax regulation by closing loopholes that allowed for tax evasion through price manipulation and multiple invoicing [6].