New auto import rules aid dealers

Customers try out an imported car in Ha Noi. A move to loosen requirements for imports of new cars will help struggling car dealers.

The move, which asks for an amendment to Circular 20, would also allow more car importers and dealers to join the market while boosting supplies of imported cars with a wider variety of brands.

Circular 20, which came into effect last June, stipulates that importers of cars with less than nine seats have to show proof that they are authorised dealers for foreign car manufacturers.

The documents have to be notarised by Vietnamese diplomatic representatives in the country of origin.

But most dealers said they would never be able to get the required documents as foreign auto companies which had joint ventures in Viet Nam would not give any such authorisation to importers.

The rule, which seems to solely allow joint ventures in Viet Nam to import cars, sent 80 per cent of private car importers and dealers nationwide bust.

According to the Ministry of Customs, Viet Nam imported 16,000 cars worth US$335 million in the first seven months of 2012, down 58 per cent in terms of volume and 44 per cent in terms of value over the corresponding period last year.

As a result, import tax revenue has also fallen.

According to a statistics from the Ministry of Finance released earlier this year, the local auto industry slump would dim the annual contribution of the sector to the State budget, which is estimated at US$2 billion annually.

Asked about his business plan if the measures came into effect, director of the Ha Noi Automobile Company Nguyen Van Dung said he would resume imports and trading of foreign cars.

Late last year, Dung was forced to turn his 300 sq.m showroom in Gia Lam District into a restaurant under a similar name, the Ha Noi Automobile Beer Restaurant.

Meanwhile, Nguyen Ba Hoc, director of the Hung Long automobile company, another prominent car importer which was fined VND40 million last year for importing 16 Lexus luxury sedans without the correct documentation, said it would renew his business if the Government loosened import sanctions.

"However, everchanging policies in the automobile sector discourage the development of the industry as a whole," he added.

Sales slowdown

Sales of locally manufactured autos in Viet Nam fell 39 per cent year-on-year in the first seven months of 2012 to 42,462 units, slowed by the economic recession, according to the Viet Nam Association of Automobile Manufacturers (VAMA)

In July, 7,433 vehicles were sold, down 26 over the corresponding period last year but up 12 per cent compared to the previous month, added the association, which represents 18 car manufactures in Viet Nam, mostly foreign invested.

According to VAMA's chairman Laurrent Charpentier, auto sales for the year were projected to hit some 95,000 units as sales in second half were always better than the first half.

The Ministry of Industry and Trade in April forecast that Viet Nam's total car sales in 2012 would drop drastically and return to 2007's level of around 80,000 units.

Last year, sales reached 138,000 units, a drop of 5 per cent compared to the previous year.