(Yicai Global) March 18 -- Foreign car brands, including BMW, Volvo Cars and Lincoln Motor, will slash prices in China due to the nation's new policy that will reduce value-added tax rates in order to cope with the slowing economy.

The above brands, as well as Mercedes Benz and Jaguar Land Rover, will cut prices in a range of CNY6,000 to CNY85,000 (up to USD12,700), or from 2 to 7 percent, these European and American companies said in statements on March 15 and over the weekend.

China will lower VAT rates in April, Premier Li Keqiang said in his annual Work Report on March 5. That for the manufacturing sector will fall to 13 percent from 16 percent.

The effects of the new policy will depend on how much a company adds value to their products, as well as the bargaining power of upstream and downstream partners in the supply chain, Cui Dongshu, the secretary of China Passenger Cars Association, told Yicai Global. 

UK-headquartered Jaguar Land Rover and Gothenburg's Volvo will give the biggest discounts of up to 7 percent. Jaguar brand has a maximum drop of CNY42,000, while that of Land Rovers will go as high as CNY85,000. Volvo will ask for CNY60,000 less for some of its cars. 

Price cuts in Michigan-based Lincoln's luxury brands, including Nautilus, MKC, Navigator and Continental, will go up to 6 percent, or CNY20,000.

Mercedes-AMG will see some of the heaviest discounts among the Stuttgart-based firm's series in China, as it has a maximum price reduction of CNY64,000. The average price drop is about 2 percent. 

Munich-headquartered BMW's Chinese unit and its dealership will jointly lower prices of China-made and imported vehicles up to CNY60,000, a decrease of 3 percent tops. 

Editor: Emmi Laine