China has just changed the rules of the game for imported luxury cars.

In a decision that promises to shake up the premium market, the Chinese government has implemented a new tax on vehicles worth more than €108,000 (approximately R$675,000), affecting both combustion and electric models.

The measure, which takes effect immediately, adds another obstacle for foreign brands such as Mercedes, Porsche, Lexus and Land Rover.

Before the change, this so-called “consumption tax” was only applied to cars priced above €156,000.

The reduction of the limit and the inclusion of EVs make clear the intention to further limit the presence of luxury imports in the Chinese market, especially at a time when local automakers offer similar models at much lower prices.

Models like the Mercedes EQS, the Porsche Taycan and the S-Class itself already exceed this new ceiling and are immediately affected by the new rule.

To make matters worse, the fee is calculated based on the final price of the vehicle, including all optional extras chosen by the customer — which can further increase the purchase cost.

Although it appears to be a targeted attack, the Chinese government justifies the measure as an effort to reduce the circulation of imported luxury cars and, indirectly, stimulate the consumption of models manufactured in the country.

According to the state news agency Xinhua, this is a “strategic” measure that targets a small segment, but one with great symbolic value.

In the first half of 2025 alone, sales of luxury cars above ¥1 million (around R$700,000) plummeted 48% compared to the same period the previous year.

And the most affected were precisely the high-end imports: 48% of the models in this price range were from Mercedes, followed by Land Rover (23%), Porsche (18%), Lexus (8%) and Bentley (3%).

Even though they represent a small portion of total car sales in China —which reached 15.7 million units in the first six months of the year—luxury models represent significant profit margins for foreign brands.

And that is precisely where the new taxation could cause the greatest damage.

Experts, such as Deng Jianquan of Cinda Securities, believe that the measure is unlikely to alienate wealthy customers, who are already accustomed to paying high import taxes—which already amount to 40% of the car’s value, in addition to a 15% customs tariff.

Still, the combination of these charges with the new tax puts imported cars at an even greater disadvantage compared to domestic models.

During the Shanghai Motor Show, Mercedes-Benz CEO Ola Källenius acknowledged that competition with Chinese automakers in the luxury segment is fiercer.

He stated that the brand will continue to focus on the stability of its models’ residual value, avoiding price wars. However, with the new Chinese tax environment, this strategy could be put to the test sooner than expected.