Would you like a Louis Vuitton handbag with that car

As you fork over your 30 per cent luxury car tax, consider the Chinese buyer being offered massive discounts and incentives such as free iPhones and cheap designer handbags. 

Luxury car makers are falling over each other to gain a foothold in the lucrative Chinese market, according to financial news and data service Bloomberg. It reports that discounts up to 25 per cent are being offered on the Audi A8L, BMW 7-Series, and Mercedes-Benz S300. 

A Mercedes distributor in the southern Chinese city of Shenzhen is also offering female customers up to 20 per cent off Chanel, Louis Vuitton and Hermes handbags if they buy a car in March. 

BMW dealers offered iPhones, free car insurance and maintenance in January and February, while Volvo gave buyers of their C30 small car a free trip to Hong Kong. 

Shanghai Mercedes-Benz salesman Jack Ren says the days when customers paid extra to jump the queue for a new car have ended. 

"A buyer of a S600 sedan ($390,000) last year would have to pay an additional 200,000 yuan ($30,000) to hasten delivery of his car," Ren told Bloomberg.

"This year, the same car is selling for 200,000 yuan less." The discounts and incentives come as China's vehicle sales are likely to fall short of an 8 per cent growth forecast thanks to a slowing economy and rising fuel costs. 

While China's car market may struggle to stay in the black, luxury car companies are still poised to make double-digit gains. Experts tip that luxury car sales will rise by about 24 per cent this year, which is down on the 34 per cent growth of last year. 

Audi, BMW and Mercedes accounted for more than 70 per cent of luxury-car sales in China, with Audi having the largest share at more than 30 per cent, according to Morgan Stanley.

Eyeing the sales luxury boom are brands such as Cadillac, Jaguar, Land Rover, Lexus and Infiniti which are expanding in China. But Credit Suisse has warned luxury car makers that offering discounts to increase their market share could dull the luster of their brand. 

"You'd rather lose a customer because of pricing because that is part of your premium heritage: people can't afford it," a spokesman said. "Protecting your brand should be the most important thing."