Indonesian cars cost nearly 290 million VND

The price of Indonesian cars arriving at ports in Vietnam is only about 12,880 USD per car, lower than cars imported from Thailand.

According to the General Statistics Office, in July, Vietnam imported about 12,000 complete cars of all kinds, with a total value of 193 million USD. Compared to June, the number of imported cars increased by more than 3,000 cars, while the import value decreased sharply.

On average, each car in July dropped to only 16,000 USD, lower than 27,000 USD of the previous month and the month with the lowest average price since the beginning of the year.

Indonesian cars imported to Vietnam have very attractive prices.

Thailand and Indonesia are neighboring countries with relatively low car prices exported to Vietnam.

Statistics from the General Department of Customs updated to June, the market recorded that the new "power" of cheap cars in Vietnam is Indonesian cars with an import volume of about 1,304 units with a value of only 16.8 million USD. The average price of each Indonesian car when imported to the port in Vietnam is only 12,880 USD - equivalent to 287 million VND - the lowest among the countries exporting cars to Vietnam.

In fact, the Indonesian government has prioritized the development of the automobile industry with the aim of becoming the world's manufacturing and export factory. The government applies attractive tax rates and has a policy of encouraging people to buy cars to increase market size. Indonesia has a population of 240 million but the size of the car market is up to 1.2 million cars, 6 times larger than Vietnam. With the tax policy that the Indonesian government is applying, the price of the same type of car in Indonesia is half cheaper than in Vietnam.

Meanwhile, Thailand has surpassed China and Japan to become the number one car exporter to Vietnam with a total of 15,117 cars, reaching a turnover of 276.5 million USD. On average, each Thai car imported to Vietnam costs only about 18,290 USD - much lower than Japan's 40,483 USD and China's 39,163 USD. The Ford Ranger from Thailand has consistently ranked number 1 in the list of best-selling cars in the market.

The price of imported Indonesian cars to Vietnam is the lowest. Unit: USD. Data: General Department of Customs

The reason why car prices from Thailand and Indonesia are much lower than those from other countries is that since the beginning of 2016, import tax on cars from the ASEAN region has decreased from 50% to 40% according to the commitment to join the ASEAN Free Trade Area (AFTA).

Another reason is that the domestic market currently imports complete cars from the ASEAN region, specifically the Thai and Indonesian markets, mainly pickup trucks such as Toyota Hilux, Ford Ranger, Nissan Navara, Chevrolet Colorado, Mazda BT50, Isuzu D-Max, Mitsubishi Triton... with a tax rate of only about 5%. Import tax for the region has decreased along with the pickup truck model, so the lower the tax rate, the cheaper the car price. This is a big advantage for cars from these countries.

Car prices in Vietnam compared to Thailand and Indonesia of the same type. Unit: USD. Source: DNSE

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 to 35% in 2017. Vehicles with a capacity of 1.5 to 2 liters will be reduced to 40%. In addition to pickup trucks, small vehicles with an engine capacity of less than 2 liters will also benefit from this Special Consumption Tax reduction. Thus, small-capacity vehicles from ASEAN will enjoy a double advantage of both reduced Special Consumption Tax and reduced import tax.

The rest of the pickup trucks are mostly equipped with engines over 2.5 liters, so the tax will increase, causing the selling price to increase by about 10-40 million VND per vehicle.

It is predicted that by 2018, when the import tax rate for cars from the ASEAN region is 0%, there will be a large number of cheap cars from Thailand and Indonesia entering Vietnam with prices reduced by at least 40%. In fact, with tax incentives, since the beginning of this year, there has been a change of throne when Thailand replaced China as the largest car exporter to Vietnam.

The trend of integration and tax elimination in the ASEAN region is also predicted by many organizations and experts to affect even the car manufacturing and trading empires in Vietnam such as Honda, Toyota, Ford... According to statistics, in the first 7 months of the year, the whole country consumed about 162,000 cars of all kinds, of which imported cars were 61,000 cars, assembled cars reached 91,000 cars.

According to VNE