China is making German premium car manufacturers sit up and take notice with a tax change.

A change to China's luxury tax is currently affecting major German premium car manufacturers. About a week ago, China's Ministry of Finance announced a change to the tax regulations for luxury cars, reducing the threshold for the tax from 1.3 million yuan (currently around 154,000 euros). The new standard has been in effect since last Sunday and should particularly benefit Chinese brands operating in the luxury segment, which could still fall below the threshold.

This no longer affects only cars with combustion engines, but also electric vehicles with a price excluding VAT exceeding 900,000 yuan (currently approximately 107,000 euros), the authority announced. It applies to new vehicles, but not to used cars. The new directive thus also affects those German automakers that produce for the premium segment in the world's largest car market. These include Mercedes-Benz, Porsche, Audi, and BMW.

BMW assumes the change will not have a major impact. A spokeswoman said that those who buy such a car tend not to be deterred by the premium. Audi stated that the new tax policy for luxury vehicles only affects a limited number of Audi models sold in China. Audi continues to monitor market developments and will adjust its strategy as necessary to ensure competitiveness.

Porsche is currently reviewing the details of the directive and its potential impact on its business, a spokesperson for the sports car manufacturer said. Together with its retail partners, Porsche is seeking solutions to protect the interests of directly affected customers. Mercedes-Benz declined to comment on the matter.

Overall, the new regulation will not leave German manufacturers unscathed, said automotive expert Ferdinand Dudenhöffer. Because it affects precisely those vehicles where the Germans still have the edge in China today—namely, large-engine combustion engines. All of them are affected, albeit to varying degrees.

China's Passenger Vehicle Association considered the new regulation "reasonable." The number of luxury vehicles in the Chinese car market accounts for about one-thousandth, association president Cui Dongshu wrote in an online post shortly after the announcement. Car imports have also declined sharply in recent years.