'Matrix' of imported car prices in Vietnam

DNUM_BJZAEZCABG 21:16

Short-term fluctuations in tax and fee levels make it difficult for importers to set prices.

There are currently at least two new regulations on special consumption tax affecting the price of imported cars in Vietnam. The first is the new special consumption tax price applied from January 1. The second is the new special consumption tax rate that will take effect from July 1.

According to the management agencies, the reason for the change in the calculation of special consumption tax is to synchronize the types of products on the market. Domestic cars have applied this method while imported cars are calculated according to the import price.The special consumption tax rate just passed by the National Assembly is to limit vehicles with large engines, giving priority to vehicles with small engines and low fuel consumption.

The problem is that the timing of these two policies is too close together. It affects the pricing and business planning of all importers.

Special consumption tax is calculated according to the formula:Tax = Price x Tax Rate. Both "Price" and "Tax Rate" change, so to calculate the amount of special consumption tax to be paid. It is necessary to clearly determine how the new price and new tax rate are applied.

Range Rover Evoque 2016.

Range Rover Evoque 2016.

The new special consumption tax calculation price is stipulated in Decree 108 detailing a number of articles of the amended Law on Special Consumption Tax. The new tax calculation price applies to imported vehicles with less than 24 seats.Accordingly, previously these types of vehicles were subject to special consumption tax based on cost price, but in the new law, this calculation is based on wholesale price according to the formula:

Wholesale price = cost price + expenses (transportation, advertising, sales) + business profit. In which, wholesale price must not be lower than 105% of cost price.

Based on the formula, it can be seen that the wholesale price calculation is quite clear, however, the businesses distributing imported cars said that they are really confused. At the launch ceremony of the new Range Rover Evoque model earlier this year, UK Auto Vietnam did not give a price. The answer is that the company has not calculated a specific price.

According to the director, his company is still waiting for daily changes in new tax rates that will affect car prices. In addition, in addition to the above changes, the company has not received detailed instructions on how to calculate from the management agencies.

"What is the basis for calculating advertising costs, sales or profits, is there any limit other than 105%, we are completely passive about that information," he explained.

Some new luxury car brands in Vietnam have explained that if they want to sell well, importers need to invest a lot in marketing and promoting their products, but when this cost increases, the special consumption tax also skyrockets, causing prices to rise. High car prices make customers less likely to look for the brand's cars.

"This calculation method becomes a big barrier for us to reach customers. Setting low prices means the business will not make a profit, but setting high prices according to tax means there will be no customers."

Not yet difficult to calculatenew tax price, imported cars are still prepared to bear the levelNew special consumption tax from 1/7Accordingly, the specific levels for vehicles are as follows:

Capacity
cylinder
Tax rate
current
New tax
1/7/2016-1/12/2017
New tax
from 1/2018
1,500 cm3 or less45%40%35%
Over 1,500 - 2,000 cm345%45%40%
Over 2,000 - 2,500 cm350%50%50%
Over 2,500 - 3,000 cm350%55%60%
Over 3,000 - 4,000 cm360%90%90%
Over 4,000 - 5,000 cm360%110%110%
Over 5,000 - 6,000 cm360%130%130%
Over 6,000 cm360%150%150%

Most of the main models of most luxury car brands have a capacity of over 2 liters, the subjects of special consumption tax will increase significantly in the coming time. For example, a luxury sedan with a capacity of 3.5 liters, the tax rate will increase from 60% to 90%, the selling price will increase by at least 20%, not to mention the increase due to the new tax calculation price.

Some companies said that to avoid the price of cars increasing too much due to the new tax, they will only import versions with small engines of large cars. For example, the Audi Q7 model, in Vietnam, has 2 versions, 2 liters and 3 liters, the current price is 3 billion and 3.45 billion, the gap is 0.45 billion. If according to the new tax calculation method from July 1, the 3.0 version will increase in price and the 2.0 will increase slightly, so the gap will widen compared to the original 0.45 billion. Many customers may hesitate between the 2.0 and 3.0 versions.

With large luxury cars, small engines are not the favorite type of traditional customers in Vietnam, because of the mentality that small engines cannot "carry" a large car body. Therefore, in reality, manufacturers cannot ignore cars with large engines. The remaining task is to balance the selling prices of the versions and models to ensure sales to compensate for profits.

"We have never had a plan for the whole year until the end of the first quarter. Everything is uncertain and unpredictable because it depends too much on policy," said the general director of a luxury car distributor.



According to VNE

RELATED NEWS

Featured Nghe An Newspaper

Latest

x
'Matrix' of imported car prices in Vietnam
POWERED BYONECMS- A PRODUCT OFNEKO