Tax-free car import prices from ASEAN not decreasing as expected
The first batch of cars subject to 0% import tax from Thailand to Vietnam is being distributed to the market, but the actual selling price has not decreased as many people expected.
According to the roadmap of the ASEAN Trade in Goods Agreement (ATIGA), from 2018, import tax on cars meeting the prescribed domestic content ratio (over 40%) will start to decrease to 0% instead of 30% as in 2017. This raises many hopes for those who intend to buy cars in Vietnam. Because in theory, import tax reduction to 0% will affect the price of cars imported from ASEAN, thereby creating competitiveness with domestically assembled cars... the prospect of massive price reductions in cars is possible. Therefore, throughout 2017 until now, many customers, despite being "well-off", have always had the mentality of waiting until the time when cars are imported tax-free from ASEAN to Vietnam before "paying".
This is also the factor that caused the sharp decrease in car consumption in Vietnam in 2017 as well as the first months of 2018. However, up to this point, when tax-free cars imported from ASEAN, mainly Honda models, have been sold on the market, many customers have been truly "disillusioned".
Tax is 0%, car prices remain "unchanged"
According to calculations by automobile businesses, when import tax on cars from ASEAN countries is reduced from 30% to 0% from 2018, the selling price of these car models to consumers will decrease by about 23%.
However, until now, when the first batch of nearly 2,000 Honda cars imported from Thailand, which are subject to 0% import tax, has been released to the market, the selling price of the cars is still "unchanged".
The selling price of some tax-free imported car models has not decreased as much as expected. |
Apart from the Honda Jazz model distributed for the first time in Vietnam, many people still have no basis for price comparison, the remaining Civic and Accord versions of the sedan line still maintain the same price as in 2017. Specifically, the selling price of the Accord 2.4L is still at 1.198 billion VND. Meanwhile, the Civic 1.5L version, after many price reductions in 2017, is still sold by dealers at 898 million VND. The other two versions of this model have lower prices, but lack some features.
For the 7-seat Honda CR-V after its launch on the market, the first batch of cars imported to Vietnam was cleared at the end of December 2017, subject to a 30% import tax, so the selling price was 1.136 - 1.265 billion VND. Entering March 2018, the new CR-V versions also accounted for nearly half of the batch of 2,000 Honda cars subject to 0% import tax from Thailand to Vietnam. According to initial calculations, the selling price of CR-V in this batch will decrease by about 23%, equivalent to 261 - 290 million VND compared to before, due to the import tax being reduced from 30% to 0%.
Besides assembled cars, some imported car models from ASEAN have been sold on the market. |
However, after nearly 3 weeks of completing paperwork, checking technical safety quality, and emission standards according to the provisions of Decree 116/2017 of the Government and Circular No. 03/2018 of the Minister of Transport, Honda CR-V is sold at dealers for 958 million VND to 1.068 billion VND. This price is only reduced by 178 - 188 million VND, equivalent to 15 - 16% compared to the batch of CR-V cars that were subject to 30% import tax.
In fact, this reduction is not really as expected by many consumers, and is still higher than the price level of CR-V in markets such as Malaysia, Indonesia...
Cars are in short supply, don't dream of price reduction
The reason why the price of cars enjoying 0% tax from ASEAN to Vietnam did not decrease as much as domestic consumers expected is explained by many reasons. Among them, a representative of a car import company said that the implementation of new regulations on car imports according to Decree 116/2017 and Circular 03/2018 caused businesses to incur additional costs.
In addition, instead of only having to check the technical safety quality and emission standards for the first batch of cars imported to Vietnam as before. Currently, each batch of cars imported to Vietnam, before being cleared through customs, must be sampled for testing according to new regulations. This causes businesses to increase the cost of storage and warehousing at the port, so the selling price of cars cannot be reduced significantly.
Cars imported to Vietnam must meet new regulations according to Decree 116/2017 and Circular No. 03/2018. |
The time from when a company places an order for production at the factory until the car is imported and cleared through customs to the customer is also longer than before.
This is also the reason why the supply of imported cars in the market is delayed. Some car models such as Toyota Fortuner, Honda CR-V ... are in short supply. Even though customers have signed a deposit contract, if they want to receive the car early, they have to pay extra fees to the sales staff or accept to buy some additional accessories with the car. This makes the selling price of imported cars in the market seem to decrease sharply after the import tax is reduced to 0%, but in reality it is "not as dreamy as it seems".
Some customers are willing to pay extra for accessories to receive their car early. |
Currently, apart from Honda Vietnam, no other car company has been able to bring car models that are exempt from import tax in the ASEAN region to Vietnam. This move makes imported cars unable to compete with domestically assembled cars, and the price level of cars is also unlikely to decrease as deeply as consumers expect.
According to data from the General Statistics Office, it is estimated that in March 2018, the number of completely built-up cars imported to Vietnam reached about 5,000 completely built-up cars, with a turnover value of 115 million USD. Compared to February 2018, the number of completely built-up cars imported increased 25 times. On average, each car imported to Vietnam in March 2018 cost about 23,000 USD, equivalent to 524 million VND.
