Imported cars tripled as soon as taxes were reduced

Both the quantity and value of imported cars in the first half of January increased three times compared to the same period last year, right after the import tax was reduced to 30%.

According to data just released by the General Department of Customs, in the first half of January, Vietnam imported a total of more than 4,900 cars, worth 116 million USD. This figure is more than double the same period in 2016 in both quantity and import value.

Of which, cars with 9 seats or less had a sudden growth with 3,700 cars, more than 3 times the level of 1,200 cars in the first half of January 2016. Car value also increased at the same rate.

This development is attributed by experts to the new tax regulations that officially took effect from January 1, 2017. WithDecree issued by the Government on Vietnam's special preferential import tariff schedule to implement the ASEAN Trade in Goods Agreement (ATIGA) for the 2016-2018 period,Cars imported from ASEAN countries will enjoy a tax rate of 30%, a 10% reduction compared to the previously applied tax rate.

Currently, the customs authority has not announced specific figures on the quantity and value of imports of specific items from countries and territories. However, in 2016, the number of imported cars from the Thai market - a country in ASEAN - alone reached 1.5 billion USD.There has been a strong acceleration. With more than 34,000 units, from the fourth position among the countries exporting cars to Vietnam, Thailand has risen to number one, far surpassing China, Korea and India.

The number of imported cars increased three times compared to the same period last year.

Import figures and tax changes could create fluctuations in the auto market in 2017 and the following years, with imported cars likely to dominate the market.

Previously, statistics from the Foreign Investment Agency, Ministry of Planning and Investment showed that in 2016, foreign investors invested in 19 sectors. Of which, for the first time, the wholesale, retail, and auto, motorcycle, and motorbike repair sectors ranked second in total investment capital (after the processing and manufacturing industry) with 505 newly registered projects. If we include additional registered capital of licensed projects from previous years and capital contributions and share purchases, the total investment capital in this sector is approximately 1.9 billion USD.

In previous years, this sector never made it into the top 3 sectors attracting the most foreign capital, but in 2016 it surpassed the production, distribution of electricity, gas, water, air conditioning and real estate sectors...

Experts also said that the strong foreign investment in the wholesale, retail and auto repair sectors predicts that assembled cars may become a disadvantage in 2017 and the following years.Companies like Honda, Toyota, Ford Vietnam... have all clearly demonstrated this strategy when they have replaced key car models from assembly to import. Each company will aim to assemble only 1-2 car models, the rest will be imported.

Mr. Vu Quang Tam, Deputy General Director of Honda Vietnam, told VnExpress that in the next 2-3 years, the company will focus on assembling a few key products. If there are no other changes in tax and fee policies, according to the roadmap to reduce import tax to 0% in 2018, cars imported from Thailand will be cheaper than those produced in Vietnam because assembled cars are subject to a 10-30% import tax on components. It is likely that many cars will be imported from Thailand by the company. Selling imported cars makes it easier for customers to access, thereby increasing sales.

To serve the goal of increasing market share in Vietnam, companies are also expanding their distribution agents and business centers. A representative of Mercedes-Benz Vietnam shared that they plan to double the dealer system by 2020 to increase market share. With the continuous expansion of the system, in the past year, Toyota has also increased the total number ofAuthorized dealers and service stations to 44. Ford Vietnam also increased the number of dealers and branches to 33 last year. In addition to popular car brands and models, many luxury car brands also have plans to expand their branches in Vietnam such as Porsche, Audi orMini Cooper...

According to VNE