Car sales rocket after registration fee cut

An auto assembly line at Truong Hai Auto Corporation at Chu Lai Open Economic Zone in Quang Nam Province. - VNA/VNS Photo

Prime Minister Nguyen Xuan Phuc decided to cut 50 per cent of registration fees for locally-manufactured and assembled cars till the end of this year. The reduction was proposed by the Ministry of Industry and Trade to help local businesses recover production and trade as well as stimulating consumption of cars.

Cars currently have a registration fee of 12 per cent of the car value in Ha Noi, and 10 per cent in other cities and provinces nationwide.

Auto dealers said the number of car buyers had increased by some 20 per cent.

In the Vietnamese automobile market, locally-assembled cars are priced at the lowest from VND299 million (US$12,892) for Kia Morning and up to VND4.9 billion for Mercedes-Benz S 450 L Luxury.

For the cheapest Kia Morning priced at VND299 million, with a registration fee from 10 to 12 per cent, car buyers only need to pay VND14.95 million to 17.94 million, instead of VND29.9 million to 35.88 million as before.

For the best-selling cars in the Vietnamese auto market such as Toyota Vios priced from VND470 million to 570 million or Hyundai Accent with VND426 to 542 million, car buyers can save up to VND34.2 million due to the registration fee cut.

Luxury car production and assembly in the country with high prices will benefit the most. In Viet Nam, the only luxury car brand assembled in the country is Mercedes-Benz, with the most expensive model the S 450 L Luxury, priced from VND4.2 to VND4.9 billion. Registration fees were previously from VND420 million to VND596 million but now cost only from VND210 million to VND298 million.

Nguyen Thi Thuy, a car buyer in Ha Noi’s Hoang Mai District told Viet Nam News that she took advantage of the policy to buy a new car a few days ago.

“I planned to buy an old car due to a limited budget. However, I decided to buy a new one at the last minute thank to the registration fee reduction. I saved some VND40 million from the cut,” she added.

Some auto dealers in Ha Noi said the policy has been warming up the market after a long stagnation due to the COVID-19 pandemic.

Dinh Van Trong, director of Hyundai Dong Do, said the number of car transactions had increased by 30 to 40 per cent against the time of the height of the pandemic. Small cars with prices of VND500 to 600 million each had the highest sales. The market is receiving positive responses from the Government's stimulus policy while businesses also reduce the cost burden.

Nguyen Van Hau, a representative from Mazda Giai Phong, told Viet Nam News that their car sales increased from 42 in May to 120 in June (up 300 per cent) after the registration fee cut took effect. There were some 100 car buyers lodging deposits to buy cars before June 28 to enjoy the fee cut.

“We are offering VND40-80 million off depending on kinds of cars on registration fees for customers. After June 28, the number of signed contracts waiting for car delivery was still high. We still have 80 cars that have not been delivered to customers who reserved due to a lack of supply,” he said.

He added that car demand at his dealership was higher than the supply, making them roll back some promotional programmes which were applied during the COVID-19.

In areas neighbouring Ha Noi, car dealers' representatives also noted that the market for assembled cars had heated up, as opposed to imported cars. For example, Mitsubishi with six out of seven models imported cars, the number of transactions did not change significantly. Locally assembled car manufacturers had a sudden increase in the early days after the policy took effect.

Experts said car sales would continue to increase this month as many customers signed contracts before and would get their car later to enjoy the policy.

However, they said the registration fee cut only applies to domestically-assembled cars, so businesses need to balance their policies to avoid the situation of consumers turning their backs on local cars after the fee cut ends and waiting for imported ones.