2018 Car Price Announcement: No Deep Discounts

With the new Decrees issued by the Government and the 2018 car prices of some companies just announced, it can be seen that there will not be a deep price reduction as expected...

Recently, many domestic automobile manufacturers and assemblers have announced the selling prices of domestically assembled (CKD) car models for the last months of 2017 and early 2018.

Specifically, Truong Hai (Thaco) has announced the selling prices of all Kia and Mazda models for 2018; Toyota Vietnam (TMV) has also announced the selling prices of its CKD models for 2018. Another highly anticipated brand, Hyundai Thanh Cong, has only announced the 2018 selling prices of the small car Hyundai Grand i10.

Currently, Hyundai Thanh Cong has only announced the 2018 selling price of the small car Hyundai Grand i10.

Notably, the selling prices of the above brands are all applied when the import tax on components is preferentially reduced to 0%. Regarding the conditions for enjoying the above import tax incentives, the Government has recently issued Decree 125/2017/ND-CP on the conditions for enjoying the above export tax incentives.

Many domestic car assembly enterprises will enjoy a 0% import tax on components if they reach the output specified in the new decree. This decree applies to about 30 main component sets, with customs codes from 98.49.11 to 98.49.40.

Notable in this Decree are 2 regulations on minimum total output and committed output of a vehicle model. With the first phase being 2018, to achieve the 0% preferential tax, manufacturers must meet both factors: total output must reach 8,000 vehicles/6 months and 16,000 vehicles/year. With this condition in the current Vietnamese market, only Thaco, Hyundai, Toyota and Ford have achieved it. Other brands that also have factories in Vietnam such as: Honda, Nissan, GM... All have total annual sales below this level.

To enjoy a 0% import tax on components, domestic car assembly enterprises must meet many newly set conditions.

The next condition is that an assembled car model with less than 9 seats has a sales volume of 3,000 cars/6 months and 6,000 cars/year, which will eliminate another name, Ford Vietnam, from the above list when this brand can hardly ensure the above condition. Currently, Ford Vietnam does not have any CKD car model with less than 9 seats with sales that can reach the above level.

According to Mr. Pham Anh Tuan, General Director of Toyota Vietnam's Strategic Planning Department, this figure is not difficult for the company to achieve. If a car sells about 500 units per month, the minimum number of cars needed to be produced in a 6-month period is 3,000 units. The three names that have certainly achieved this are Truong Hai, Hyundai Thanh Cong and Toyota Vietnam.

However, if we look at the car prices announced by the above companies for 2018, we can clearly see that people's expectations of a deep drop in car prices have not happened.

According to the announcement of Toyota Vietnam, the selling price for 2018, Toyota Vios decreased from 48-58 million VND.

In the price lists for 2018, it can be seen that the new prices of popular car models have not decreased significantly. Specifically, Kia Morning has the highest discount of about 15 million VND while the CX-5 model has only been reduced by about 20 million VND. Similarly, the Hyundai Grand i10 model has been reduced from 20-40 million VND depending on the version or Toyota Vios is from 48-58 million VND.

When the price of CKD cars is announced, domestic consumers are now only looking forward to the selling price of imported cars from ASEAN when the import tax on these models is completely exempted to 0%.

However, at present, major brands are still holding back. With the recent Decree 116/2017, many experts predict that even if imported car prices are exempted from tax, it will be difficult to reduce further. The new Decree 116 with many barriers will increase import and inspection costs. That will not only reduce the price of imported cars but may increase slightly. Thus, the dream of owning a "reasonably priced" car for many Vietnamese consumers continues to be far away.

Honda CR-V has just been launched in Vietnam but there is still no specific price for each version.

At the same time, the impacts of Decree 116 on the Vietnamese automobile market have also been clearly demonstrated. Specifically, many Toyota dealers have had to renegotiate with customers who ordered new models such as Fortuner diesel automatic transmission, Wigo because they could not guarantee the exact time the vehicle would be cleared through customs. Many other car manufacturers such as Ford, Chevrolet, Mitsubishi whose vehicles are imported from Thailand have also been affected because they have to supplement many new documents.

Even the new Honda CR-V model has just been introduced in the Vietnamese market, but the selling price for each version has not been announced yet due to the need to recalculate costs. With the estimated price that Honda Vietnam has given for the new CR-V (under 1.1 billion VND), it can be seen that the price of imported cars from ASEAN enjoying 0% preferential tax is not as expected by consumers.

January 1, 2018 is approaching, but with a lot of new information and barriers, the Vietnamese automobile market is still very difficult to predict. Car manufacturers are still doing everything they can to revive the market, while consumers are still quite indifferent despite the continuous price reduction./.

According to VOV