Jaguar Land Rover, Volvo lower prices in China after VAT cut

Source:Global Times Published: 2019/3/17 20:52:32

The building of Jaguar Land Rover in Beijing in February Photo: IC

Jaguar Land Rover and Volvo announced on Saturday that like other major vehicle producers, including BMW and Mercedes-Benz, they will lower the sticker prices of their cars sold in China in response to the nation's value-added tax (VAT) cut. That cut will take effect on April 1.

Jaguar Land Rover will cut its prices by up to 42,000 yuan ($6,256) on its Jaguar models, and by up to 85,000 yuan on its Land Rover models, according to a report by domestic finance website cs.com on Saturday. The price cuts cover all its models under Jaguar Land Rover, including models produced in China. 

Volvo's cut also covers all models sold in China. Cuts on the sport utility vehicle XC90 models will range as high as 60,000 yuan.

The VAT cut was announced on March 5 by Premier Li Keqiang in this year's Government Work Report. For the manufacturing sector, the VAT rate was cut from 16 percent to 13 percent, and in the transport industry the rate fell from 10 percent to 9 percent. 

The price cuts are part of the automobile makers' attempts to boost sales after an industry-wide decline in 2018. According to the China Association of Automobile Manufacturers, vehicle sales last year fell 2.8 percent compared with the previous year. 

Jia Xinguang, a Beijing-based industry analyst, told the Global Times that the car industry's ongoing decline largely reflects a broader economic slowdown, which has cut consumer demand for cars.

"Figures from January and February show that the automobile industry in China is still facing difficulties," Jia said. "Since cars are products with high price elasticity, demand is more likely to be affected by the overall economic situation."

As for this year, Jia said the VAT cut will most likely affect prices of higher-end cars, so it's less likely to boost the overall industry.

"However, other policies, including those aiming to increase car demand in rural areas, may create scope for growth in 2019," said Jia. 



Posted in: ECONOMY,COMPANIES

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