Indian cars flood into Vietnam with average price of 154 million VND

According to the latest statistics from the General Department of Customs, in September, there were about 8,686 completely built-up cars of all kinds imported into Vietnam, worth 163.5 million USD. Compared to the same period last year, the import volume increased by only 100 cars but the turnover decreased by 16.8%. Most of the imports were cars with less than 9 seats, with about 3,594 cars. In the first 9 months, Vietnam imported about 77,515 cars, worth 1.75 billion USD, down 16.9% compared to the same period last year.

» Borrowing money from the bank to buy a car: What do Nghe people think?

India has emerged as the second largest car exporter to Vietnam.

Stick to Thailand

Thailand continues to lead the way in importing completely built-up cars into Vietnam in both quantity and value, with 23,899 cars, up 41%; value of nearly 440 million USD, up 59% over the same period.

Cars imported from China and South Korea have dropped sharply in both quantity and value. Of which, South Korea exported 13,871 cars to Vietnam, worth 230 million USD. China exported 8,886 cars with a value of 342 million USD.

Among the markets importing cars into Vietnam, Thailand is number one in terms of quantity. However, the “power” of cars originating from India is rising strongly in Vietnam with outstanding advantages in low prices.

Specifically, in September, India rose to become the second largest car exporter to Vietnam with about 1,756 cars, an increase of 78% over the same period.

In the first 9 months, the number of imported cars from India increased to 11,103 cars, with an import value of 76.8 million USD.

Thus, India ranked third in automobile exports to Vietnam in the first nine months of this year, after Thailand and South Korea.

New power

On average, each Indian car arriving at a Vietnamese port (CIF price) costs about 6,924 USD (154 million VND/car), the lowest compared to other car export markets to Vietnam.

Meanwhile, the average price of Thai cars is 18,410 USD/car, Korea (16,581 USD), China (38,455 USD),... Indian cars entering Vietnam are mainly small cars such as Grand i10, Suzuki Ertiga.

Because it is not among the countries that have trade agreements with Vietnam on automobiles, cars from India still have an import tax rate of about 68%, higher than the preferential rate of 40% from ASEAN countries. However, cars from India often have small engine capacity.

According to the new Special Consumption Tax Law, vehicles with a capacity of less than 1.5 liters will be reduced from 45% to 40% from July 1 and will be reduced to 35% in early 2017. Vehicles with a capacity of 1.5 to 2 liters will be reduced to 40%. This tax reduction is said to have created a significant advantage for vehicles from India.

Automobile production in India is growing strongly with many preferential policies. Photo: Internet

According to importers, cars from India in the Vietnamese market have a price advantage over some domestically assembled cars in the same segment. In general, people still prefer imported products over assembled ones. Cars from India also tend to be more fuel-efficient due to their small engines.

Although the average port price is only about 154 million VND/car, when adding import tax, special consumption tax, registration fee, VAT..., the price of Indian cars to consumers is still about 350-500 million VND.

Why cheap?

Mr. Nguyen Tuan - Director of Thien An Phuc Company Limited - a company specializing in importing cars, said that India is considered the "capital" of cheap cars due to the country's preferential investment policies.

Therefore, many large automobile corporations in the world have invested heavily here, optimizing costs due to cheap labor and low taxes, so they are highly competitive with similar car models in many countries. That is the reason why the price of Indian cars arriving at ports in Vietnam is lower than the general level.

However, Mr. Tuan also said that most of the cars imported from India have Euro 2 standards - this standard has been limited in use in developed countries. Therefore, car manufacturers tend to push to markets with high demand for cars like Vietnam.

In Vietnam, in early 2017, Euro 4 standards will be officially applied nationwide. That is why there is a massive import of vehicles before Euro 4 standards are applied.

In particular, Mr. Tuan said that the strong growth in importing cheap cars from India is due to a number of new taxi companies appearing in Vietnam and these companies have a great need to expand their network and renew their vehicle systems.

According to Bach Duong/vneconomy