Vietnam Auto Marks 2013: Happy with registration fee, worried about assembly

Although there were not many fluctuations, the Vietnamese automobile market and industry in 2013 still left strong impressions.

In contrast to the still rather gloomy atmosphere of the market in general, the luxury car market in particular had a really exciting year.

Notably, the 5 milestones below are all expected to play a role in opening a new trend or have a great influence on the entire industry in the near future.

Significant reduction in registration fees

The biggest good news for Vietnamese car consumers in 2013 is probably the decision to sharply reduce registration fees for passenger cars with less than 10 seats registered for the first time.

Specifically, on March 25, the Government issued Decree 23/2013/ND-CP, which stipulates that the registration fee rate for passenger cars with less than 10 seats registered for the first time is 10%. In case it is necessary to apply a higher fee to suit the actual conditions in each locality, the People's Councils of provinces and centrally run cities decide to adjust the fee up but not more than 50% of the general regulation. This regulation officially takes effect from April 1.

After that, cities that applied high registration fees such as Hanoi, Hai Phong, and Da Nang gradually adjusted their fees down. As of December 2013, the fees in most localities nationwide had been reduced to 10%, with Hanoi applying 12%. Ho Chi Minh City was the last locality to adjust and the 10% fee will officially take effect from January 1, 2014.

Remember, it was the increase in the registration fee rate, in which Hanoi applied 20% and other localities commonly applied 15%, that contributed greatly to the reduction of car purchasing power in the entire market in 2012 to a very low level. That is why in 2013, the customs sector proposed to reduce the registration fee rate to stimulate the market, thereby increasing the budget revenue from car taxes and fees.

Although the reduction in registration fees came quite late (most localities implemented it in the second half of the year), it has somewhat boosted the recovery of the automobile market. According to calculations by the Vietnam Automobile Manufacturers Association (VAMA), the total automobile purchasing power of the entire market in 2013 reached about 109,000 vehicles, an increase of 8% compared to 2013. The move to reduce registration fees is also expected to help automobile purchasing power continue to increase in 2014.

Concerns about assembled cars

In fact, the story about the future of the Vietnamese automobile industry has been discussed for many years. However, with the massive influx of imported brands and vehicles, the fear of the collapse of the automobile manufacturing and assembly industry in Vietnam has been pushed to a climax.

It can be seen that the concern for domestically assembled cars has never been as great as in 2013. Meetings, forums and newspapers have continuously appeared with the “threats” of pressure from the roadmap to reduce import tax on completely built-up cars from ASEAN countries.

According to analysts, as of 2013, there are only 5 years left before the import tax rate for completely built-up cars from ASEAN will be 0%. While the capacity of the domestic auto industry is still too weak, with the tax advantage, and the subsequent selling price, the collapse of a series of factories in Vietnam will certainly occur. And as warned by a representative of a large auto corporation, "if not drastic, by 2018, at best, there will only be 3 car manufacturers maintaining factories in Vietnam".

The question is, is 5 years enough time for the Vietnamese auto industry to create a miracle?!

The pressure has become even more real as the auto corporations assembling cars in Vietnam have announced new factory investment projects in two countries in the region, Thailand and Indonesia, including factories with investment capital equivalent to the total investment capital of existing factories in Vietnam.

Race to request tax extension

2013 witnessed a major "movement" in the auto industry as car companies raced to apply for tax extensions with taxes amounting to thousands of billions of dong.

The enterprise considered to have the role of “opening the door” is Truong Hai Auto Corporation. After submitting the application, Truong Hai was approved by the Government to extend the tax payment by VND 1,200 billion. Since then, a series of other enterprises such as Vietnam Engine and Agricultural Machinery Corporation (VEAM), Xuan Kien Auto Corporation (Vinaxuki), Thanh Cong Group Corporation, TMT Auto Corporation, Hoang Tra Company Limited and Dong Phuong Auto Company Limited have also applied for tax payment extension.

The reason, according to businesses, is because the difficult economic situation and the prolonged gloomy market have led to large inventories, high debt, and factories operating at a standstill. In fact, this is also the common situation of most other manufacturing and business sectors in the past few years.

Luxury cars stir up

In contrast to the still rather gloomy atmosphere of the market in general, the luxury car market in particular had a really exciting year.

According to distributor representatives, sales of luxury car brands in 2013 were very good, with most major brands achieving a growth rate of 20-30% compared to the previous year. Unfortunately, when it comes to detailed statistics, these car companies appear vague.

However, just looking at the massive entry of new brands is enough to see the attraction of the luxury car market in 2013. Within just one year, a series of big names have appeared in Vietnam such as Lexus, Rolls-Royce, Bentley, Lamborghini, Infiniti or Jaguar. Among them, there are brands that have officially launched in the market.

The growth of this brand group has created a balanced and fair playing field at the Vietnam Motor Show 2013 with many luxury car brands such as Mercedes-Benz, BMW, Audi, Lexus, Infiniti and Land Rover.

Record exhibition

Although the market has not really escaped from difficulties, 2013 witnessed a truly impressive auto show with records.

First of all, about the scale. Vietnam Motor Show 2013 is the largest auto show in Vietnam ever, gathering 15 brands for the first time, including many new brands and some brands returning after a few years of absence due to sluggish performance (if compared to the 2011 show, which only had 7 car brands participating, this difference will be even more evident).

With the participation of 7 imported car brands (including two brand new names, Lexus and Infiniti), Vietnam Motor Show 2013 is truly an automobile “festival” in Vietnam. Therefore, the gloomy atmosphere in the market seems to be erased with the number of visitors reaching a record of 150,000.

The most exciting record is that right at the exhibition, the number of customers ordering cars is so high that after only 3 days, many car companies announced that they were "sold out" with dozens of contracts signed. Notably, even with luxury brands such as BMW or Mercedes-Benz, many customers piled up cash "on the spot" to buy the cars on display. Since then, a rather strange image at Vietnam's auto shows is the continuous display of "sold" signs.

According to thoibaokinhte