Domestic cars are discounted, imported cars with 0% tax cannot be brought to Vietnam
Domestically assembled cars continue to "initiate" the price reduction race, while car models manufactured in ASEAN that are subject to 0% import tax still cannot be imported to Vietnam.
The car price war, the rise of Truong Hai (THACO) and the impact of new policies... have outlined a turbulent 2017 for the Vietnamese car market.
The automobile market in early 2018 is becoming a "stage" for domestically assembled cars, as cars manufactured in ASEAN enjoying a 0% import tax rate are still unable to enter Vietnam, causing imported car prices to not decrease as expected by consumers.
Domestic cars stir up the market
Contrary to predictions, domestically assembled cars will face a lot of competitive pressure when imported cars from ASEAN enjoy 0% tax from the beginning of 2018. Policy changes in the final stage of 2017 are contributing to helping "domestic" cars gain the upper hand in the market when the door of 2018 has opened.
Chevrolet car models with price incentives from 10 - 80 million VND in January 2018 |
The regulation to reduce import tax on components to 0% according to Decree 125/2017 ND-CP, for domestically assembled cars that meet the output requirements, along with the special consumption tax (SCT) reduction policy for cars using engines under 2.0L... opens up opportunities to help "domestic" cars continue to reduce selling prices, competing with imported cars.
On the first day of 2018, GM Vietnam announced a price incentive program for Chevrolet models currently distributed on the market. In particular, Chevrolet Cruze was reduced by 70 - 80 million VND, helping this model to reduce its selling price to 519 - 619 million VND in January 2018, the lowest price in the current C-class sedan segment.
The Aveo model is being offered a preferential price by the American car brand at 409 - 435 million VND, a reduction of 50 - 60 million VND compared to 2017. The Chevrolet Captiva Revv also has a reduced price of 44 million VND, some versions of the Colorado pickup truck are reduced by 10 - 30 million VND in January 2018.
Domestically assembled car prices have decreased across the board since 2018, but consumers are still waiting. |
Meanwhile, Honda dealers nationwide are applying a discount of 5 - 9 million VND for two versions of the B-class sedan - Honda City. "This price reduction is adjusted according to the roadmap to reduce special consumption tax from 40% to 35% for cars with less than 9 seats equipped with engines with a capacity of less than 1,500 cc, effective from January 1, 2018." - Sales director of a Honda car dealer in Ho Chi Minh City said.
With this reduction, the selling price of the City 1.5L version is only 559 million VND, while the City 1.5L TOP version, equipped with more features, is priced at 599 million VND.
After a period of distributing Outlander as a completely imported car, Mitsubishi also switched this model to assemble in Vietnam, helping the selling price of the 2.0 STD version to only 808 million VND. This is considered a move by Mitsubishi to compete with rivals in the Crossover segment in Vietnam such as Mazda CX-5, Nissan X-Trail...
Many domestically assembled car models have reduced prices by hundreds of millions of dong. |
Previously, THACO also announced a roadmap for price reductions for KIA and Mazda models from January 1, 2018. The small-sized KIA Morning was reduced by 4-6 million VND, and the Cerato was reduced by 10-20 million VND compared to the selling price at the end of 2017.
Some other car models such as Mazda3 have been discounted by THACO by 5 million VND, Mazda2 by 6 - 21 million VND starting from 2018. Meanwhile, the selling prices of domestically assembled Toyota models remain unchanged after the price reduction announced in early November 2017.
Imported cars with reduced tax have not yet arrived in Vietnam
Contrary to the downward trend of domestically assembled cars, even though it is 2018 - the year when import tax on complete cars from ASEAN to Vietnam is 0%, imported car prices "remain unchanged".
Most of the imported car models from ASEAN distributed in the market at the present time have not had their selling prices reduced as expected by consumers. The reason explained by car dealers is that the car batches distributed in January 2018 had completed import procedures and customs clearance before January 1, 2018, so they are still subject to the old import tax rate of 30% instead of the current 0%.
Thousands of imported cars gathered at Saigon port at the end of 2017 |
“To ensure supply during the sales season near Lunar New Year 2018, we have to complete customs clearance procedures for the batches of cars that were planned to be imported in December 2017. Therefore, the selling price when reaching customers will be difficult to reduce significantly because they still have to pay import tax of 2017,” said a representative of an FDI automobile company.
Previously, in the last days of 2017, thousands of imported cars were gathered at Hiep Phuoc port, Nha Be, Ho Chi Minh City. Most of these cars had been cleared by enterprises in December 2017 and were subject to import tax of 30% for passenger cars with less than 9 seats and 5% for pickup trucks.
Of these, about 700 new generation CR-Vs were imported by Honda to Vietnam for distribution to consumers in January 2018. Previously, after the new generation CR-V with 5+2 seat design was launched in the Vietnamese market, dealers gave a tentative price of about 1.1 billion VND for the highest-end version.
However, the first batch of new generation CR-V cars distributed in Vietnam in January 2018 but subject to import tax of 2017, the price will likely increase.
The new generation Honda CR-V will be distributed in January 2018 but will be subject to a 30% import tax due to customs clearance in December 2017. |
In addition to the new generation Honda CR-V imported to Vietnam, new models such as Honda Jazz, Toyota Wigo, Toyota Fortuner diesel automatic transmission version still cannot reach consumers in 2018.
According to a survey by Thanh Nien reporters, most Toyota dealers in the Ho Chi Minh City area had no new Fortuner cars left to sell in January 2018. The dealers still had a few Fortuners left, which were quoted by sales staff at a price about 120 million VND higher than the listed price, including insurance packages and accessories.
According to new regulations, from January 1, 2018, enterprises are only allowed to import cars after being granted a Car Import Business License according to the provisions of Decree No. 116/2017/ND-CP (Decree 116).
In addition, when importing cars to Vietnam, businesses must present a type quality certificate issued by a competent foreign authority to complete customs clearance procedures. In particular, each imported car batch must bring a representative model of each type to be tested for emissions and technical safety quality.
According to some import companies, this process will take about 2 months. Therefore, even businesses that meet the required paperwork to import cars to Vietnam in January 2018 will have to wait a while before they can distribute new models to the market.
Fortuner is in short supply, distributors raise prices by hundreds of millions of dong |
According to a representative of an automobile company in Vietnam, with the current situation, some imported car models may fall into a "shortage" situation during the shopping season near the Lunar New Year 2018, and at the same time, the selling price will not be reduced as expected to be able to compete with domestically assembled cars. Currently, import enterprises are still waiting for the circular guiding Decree 116.
The return of BMW, MINI and new imported car models from ASEAN will contribute to bringing more choices to car consumers in Vietnam in 2018.
