Should I wait until 2018 to buy a cheap car?

Since the beginning of February 2017, car manufacturers have continuously launched programs to reduce prices, promote sales, and give gifts. In addition, imported cars to Vietnam are becoming cheaper and cheaper. However, car sales have decreased.

Specifically, according to the Vietnam Automobile Manufacturers Association (VAMA), the total automobile market sales in February 2017 reached only over 17,600 vehicles, down 13% compared to the previous month. The output of domestically assembled vehicles also decreased by 6% compared to the previous month.

Wait for further reduction to buy

Explaining the main reason for the above strange phenomenon, many opinions say that the market is slowing down due to the psychology of waiting for car prices to be cheaper before buying. Mr. Nguyen Trung Thanh, living in District 12, Ho Chi Minh City, said that although Mazda cars have been discounted by 10-30 million VND, he plans to wait until next year to buy a car.

Cheap cars are imported into our country more and more, but now many people have to buy them at exorbitant prices due to high taxes and fees.

Mr. Thanh analyzed: “Since the beginning of this year, the import tax on cars from ASEAN has only decreased by 10%, but the price of cars has decreased by tens of millions. If the tax is 0% next year, the price of cars will decrease even more, maybe by hundreds of millions of dong. That is why I am not in a hurry to buy a car at this time.”

When we informed him that the car model he planned to buy was manufactured and assembled domestically and therefore would not enjoy the 0% tax incentive, Mr. Thanh still maintained his intention. Mr. Thanh said: “The reduction in car import tax will affect the entire market. The reduction in the price of imported cars from the ASEAN region will force domestic car manufacturers and imported cars from other countries to also reduce their prices to compete. Therefore, car prices in 2018 will certainly decrease sharply.” Many other people have the same mentality as Mr. Thanh.

Mr. Duc Minh, owner of a Toyota car dealership in Tan Binh District, Ho Chi Minh City, said the psychology of waiting to buy a car next year has spread to the market, causing a clear decrease in purchasing power. Even the Vios, which has long been a best-selling car, sold more than 1,700 cars in the first month of this year, but in February, sales dropped by nearly half.

“The popular car model Fortuner also suffered the same fate when sales decreased by more than 300 cars in February. In addition, many imported cars, although discounted from 44 million to over 210 million VND, have not seen much improvement in sales,” said Mr. Minh.

Ms. Nguyen Thi Hien, in charge of the used Toyota system, added that due to the psychology of waiting until next year to buy cars, car companies have to continuously launch many stimulus strategies. However, the reality shows that even the best-selling car models on the market have decreased sales.

Don't expect too much

From the beginning of next year, the import tax on cars from ASEAN countries will be 0%, but don't expect too much that car prices will drop sharply. That is the general opinion of businesses and experts. Mr. Tran Tan Trung, General Director of Lien A International Joint Stock Company, said many consumers do not clearly understand the roadmap for reducing import tax on cars from ASEAN. In fact, to enjoy the 0% import tax incentive, these car models must have a 40% intra-ASEAN content ratio.

By 2018, only some car models will benefit from 0% tax, not all car models.

Meanwhile, the number of car models that achieve the above-mentioned intra-bloc ratio is not many, each car manufacturer usually has only 1-2 models. This means that only a few models imported from ASEAN have reduced taxes and can reduce prices.

“In addition, Vietnam not only imports cars from ASEAN but also from Japan, Korea, the US, Europe, etc. Products imported from these countries do not have tax reductions. In particular, cars with large engine capacity of 2.5L or more are expected to increase, not decrease,” Mr. Trung commented.

As for pickup trucks, according to Mr. Trung, most of them are imported from Thailand with a high localization rate. However, this type of vehicle imported into Vietnam currently enjoys a low import tax rate (5%). Therefore, when the tax is 0% next year, the price of pickup trucks will not decrease much.

Sharing the same opinion, Ms. Nguyen Thi Hien said that if the special consumption tax policy, value added tax, registration fee... for imported cars in Vietnam do not change next year, it is possible that some imported cars from ASEAN will have their prices reduced thanks to zero tax. For example, the Yaris model imported from Thailand to Vietnam ports currently costs about 400 million VND, reaching customers for more than 660 million VND. If the import tax is reduced to 0% based on the import price at the port, the price of this car model reaching consumers will decrease by about 20-30 million VND, or about 630-640 million VND. This reduction is not high.

However, the Ministry of Industry and Trade believes that the reduction of import tax on completely built-up cars in ASEAN to 0% will clearly affect the Vietnamese automobile market. Car manufacturers in Vietnam have also considered reducing the number of car models produced and assembled in Vietnam, instead importing completely built-up cars from Thailand, Indonesia... That shows that the prices of many imported car models will decrease, but the decrease will depend on many factors such as whether Vietnam applies trade defense measures or not.

According to VNN