Major automakers in Viet Nam like Ford, Toyota, Honda and Mazda significantly reduce their car prices to promote consumption.
Ford discounted most of their models distributed in Viet Nam by up to US$5,896 for Ford Everest. Toyota lowered prices of their Land Cruiser Prado TX-L and Camry 2.5Q by US$7,216 and US$5,280 respectively.
Prices of Honda’s two models Accord and CR-V dropped by US$8,448 and US$7,480, hitting a record of auto price reduction in Honda’s history in Viet Nam.
The two crossover models, luxury Wolkswagen Touareg and compact Mazda CX-5 2.0L, were also discounted remarkably by US$11,440 and US$9,064 respectively.
Despite the various discounts, automobile sales in July only reached 20,662 cars, dropping by 15% compared to the previous month, and 27% over the same period last year.
The total automobile imports also reached the lowest point in the past 1.5 year with the quantity of 6,940 vehicles in July, according to the General Department of Vietnam Customs. In the first seven months of 2017, the imports declined by 4% in quantity and 16% in value, compared to the same period last year.
MoF is attempting to encourage domestic car manufacturers. Photo: Internet
One car showroom owner in Hanoi explained for the sales decrease that consumers are hoping for the ASEAN Trade in Goods Agreement (ATIGA) to take effect, dropping auto tariff to 0% from 2018, and also waiting for the government to make decisions in adjusting tax policies for automobiles.
The new tariff cut will open the doors for cars imported from ASEAN. It poses a threat to automakers outside the region and also domestic ones. Currently, Thailand is leading the top automobile exporters to Viet Nam.
The Ministry of Finance (MoF) has recently proposed plans to encourage domestic car manufactures. According to Pham Dinh Thi, Director of Tax Policy Department of Ministry of Finance, there should be a change in how to calculate special consumption tax, applied to domestically produced cars. The value added in the country, such as components and spare parts, should be deducted from the taxed price.
MoF proposes to raise tax rate for pick-up cars. Photo: Internet
MoF also suggested raising the tax rate for pick-up cars since their sales have been accelerating in the past years. The sales of pick-up models has increased by more than 8 times during the last 5 years, from 3,300 cars in 2012 to 28,000 ones in 2016.
The current tax rate for this model is 15-25%, now proposed to be increased to 30-54%. It would mean that pick-up car prices could rise by 10-20%.