Car buyers still in a spin

Under the draft circular and car import tariffs the Ministry of Finance is putting for general comments before it will be applied towards all imported automobiles from World Trade Organization (WTO) and ASEAN member countries starting from January 1, 2012 complete-built unit (CBU) under 10-seat cars with cylinder capacity of under 2.5L will incur new import tariffs of 78 per cent instead of 82 per cent, while the tax rate for cars with over 2.5L cylinder capacity will be 74 instead of 77 per cent.

The 72 per cent import tariffs imposed on four-wheel drive automobiles with big cylinder capacity will be eased to 68 per cent. Tax rates remain uncharged for cars of over 10-seat and trucks with carrying capacity of over six tonnes to 18 tonnes as well as specialised passenger coaches used in airports at 70 and 5 per cent, respectively.

Imported component sets for locally assembled cars will be tax free or enjoy floor levels in import tariffs enacted by the National Assembly’s Standing Committee.

Honda Vietnam automobile section director Akira Makito assumed tax cuts would benefit consumers and bolster auto market development.

“Price factors will still be a major hurdle to personal car market growth in the country until 2018 when Vietnam will finalise its import tariff reduction programme within CEPT/AFTA framework if such high tax rates remain, besides various fee impositions,” according to a recent report on Vietnam’s auto industry development planning to 2020.

Reality shows that imported car stock by commercial firms has drained after Ministry of Industry and Trade’s Circular 20/2011/TT-BCT supplementing regulations on import car procedures came into force from late June 2011 which requires firms to present authorised import certificates by genuine manufacturers.

In fact, some commercial firms risked bringing Toyota and Lexus brand-new cars into Vietnam after Circular 20 became effective.

However, in October 2011 Japan-based Toyota Motor Corporation  forwarded documents to competent Vietnamese agencies confirming that it only authorised Toyota Vietnam to import and sell Toyota brand cars and was yet to appoint any Vietnam-based dealer to import and sell Lexus brand cars including Toyota Vietnam.

The same method is applied by some foreign-backed car firms to avoid the flow of new cars imported into Vietnam via non-official channels. Industry insiders then assumed car prices would not go down remarkably in the coming period when only exclusive distributors ‘play the game’.