Bayerische Motoren Werke AG and Daimler AG-owned Mercedes-Benz will cut their prices in China after the government announced that it is reducing the country's value-added tax, Reuters reported March 16, citing the German car brands' posts on Chinese social media.
BMW will reduce prices for both imported models and those manufactured locally, including the China-made BMW 3 series and BMW 5 series and the imported BMW X5 and BMW 7 models, according to the report.
The BMW 320Li M model reportedly will sell for a suggested retail price of 339,800 yuan from its original price of 349,800 yuan.
In a post on Chinese messaging app WeChat, BMW reportedly said the price cut is the company's "active response to the national VAT adjustment notice."
Meanwhile, Mercedes-Benz will implement price cuts of 10,000 yuan to 40,000 yuan on select models, Reuters said.
The carmakers' decisions come as Chinese Premier Li Keqiang announced March 5 that China will cut value-added tax across a range of industries. For the manufacturing sector, the tax is expected to drop to 13% from 16%, while the transport sector is expected to see taxes drop to 9% from 10%, the news outlet said.
In February, BMW sold 44,582 units of BMW and Mini vehicles in China, up 0.6% year over year, while sales of Mercedes-Benz cars fell 5.4% to 40,733 vehicles.
As of March 15, US$1 was equivalent to 6.71 Chinese yuan.