The dream of a cheap car is gone, the buyer suffers double losses.

New regulations continue to tighten car imports, foreign car prices are unlikely to decrease early next year as expected.

The Government has just issued Decree 116/2017 regulating the conditions for production, assembly, import and business of automobile warranty and maintenance services. This Decree takes effect from October 17, 2017.

According to businesses and experts, this new regulation does not loosen the grip on car imports as many people expected, but is actually tighter than the old regulations. A series of new conditions could cause many car import businesses to close shop.

Auto giants benefit

Decree 116 clearly states that in order to trade in imported cars, both new and used cars, enterprises in Vietnam (VN) must have a document confirming their right to represent foreign car manufacturers and assemblers to recall imported cars in VN. At the same time, they must be consularly legalized by a Vietnamese diplomatic agency abroad.

Commenting on the newly issued conditions, Mr. Tan Tran, director of a car import company, said that this regulation only benefits genuine car importers and is disadvantageous to non-genuine car importers. In particular, imported used cars may not be able to enter Vietnam.

The reason is that currently foreign car manufacturers usually only issue recall certificates to one unit. Moreover, it is not easy for non-genuine importers to obtain confirmation documents or documents proving that they are authorized by foreign manufacturers to carry out recalls of imported cars in Vietnam.

Mr. Bui Xuan Truong, Director of Truong Thanh Auto Company, also said that some conditions in Decree 116 are no different from the requirement that imported cars must have a genuine authorization certificate stipulated in Circular 20/2011 of the Ministry of Industry and Trade, which has been strongly opposed by experts and businesses. Because in case the foreign car manufacturer does not agree to commit to recalling the product, it cannot be imported.

Customers suffer in every way.

Not only that, Decree 116 also stipulates: Automobile warranty and maintenance facilities must meet the conditions of having a commitment to provide technical support and supply components and accessories for automobile warranty and maintenance of foreign automobile manufacturing and assembling enterprises.

Analyzing the content of the above regulation, Mr. Nguyen Minh Dong, an expert in the automobile sector, said that there will not be many car importers that can meet the new strict conditions. Moreover, the regulation is not appropriate because most car manufacturers do not produce their own components and spare parts, but 40%-60% rely on other companies to do so, possibly in many countries. Therefore, this regulation will indirectly narrow down the importers, causing consumers to suffer great losses.

Even creating conditions for some genuine car warranty and maintenance facilities to sell spare parts at sky-high prices. For example, a car battery sold in Europe costs only 100 euros (less than 3 million VND), while at a warranty and maintenance facility in Vietnam, it sells for 23 million VND.

Therefore, according to Mr. Dong, it is necessary to open the door for all individuals and businesses to have the right to import components and spare parts instead of creating a monopoly for a few large businesses to benefit. Then only Vietnamese consumers will suffer in every way.

Similarly, the director of Truong Thanh Auto Company, Mr. Bui Xuan Truong, also assessed that with the conditions in Decree 116, consumers will lose their rights because there will be a monopoly in car import, warranty and maintenance.

“When there are many units with warranty and import, the market will be more competitive. From there, prices and service fees will also be better and consumers will benefit. Now, if there are only a few units doing it, customers will suffer and will not have many choices,” Mr. Truong analyzed.

Imported car prices will not be cheap

The new decree clearly states: Newly imported cars must be inspected and tested by quality management agencies according to regulations on technical safety and environmental protection for each imported batch. Each imported batch of cars must be sampled and tested for technical safety and environmental protection.

Under the old regulations, when importing, businesses only need to take one vehicle as a sample for testing. Subsequent shipments of that model do not need to be tested again.

Therefore, according to a representative of a car importing company from Europe, the newly issued regulation is unreasonable because for one car model, the company imports many batches, many times with different times. If it is the same car model, the management agency should only check one sample at a time for many batches. If each batch is checked, the company's costs will increase, because each car model brought for testing, emission testing, engine testing... must pay a fee of about 30-40 million VND for each batch and many other fees.

“Consumers have been waiting for January 1, 2018, to buy cheap cars when import tax from the ASEAN region is 0%. Unexpectedly, the wait is only to be disappointed because with the newly issued conditions, the price of imported cars may not decrease,” said the representative of the above enterprise.

It is not easy to get a quality certificate.

According to Decree 116/2017, when conducting testing, enterprises must provide a copy of the quality certificate of imported automobile types, issued by a competent foreign agency or organization.

This condition makes many car importers worried because in many countries, competent authorities only issue quality certificates for cars sold domestically; exported cars do not need this certificate or let businesses take responsibility for product quality and do not issue quality certificates.

Meanwhile, without a type approval certificate, imported vehicles to Vietnam will not be tested. This also means they will not be able to clear customs and be sold in the Vietnamese market.

Ms. Nguyen Thi Hien, in charge of Toyota Vietnam's used car system, predicts that a wave of cheap imported cars from the ASEAN region will certainly flood into Vietnam from 2018 when import tax is 0%.

To protect domestic automobile manufacturing and assembly enterprises, Vietnamese authorities have issued a series of new conditions in Decree 116/2017. To protect domestic production, many countries have done the same. Regulations to tighten automobile imports are necessary if based on the common interests of the entire domestic automobile industry.

However, Ms. Hien said that with the new regulations, the car import business will face difficulties. When the number of imported cars is not much and the cost increases, the price will hardly decrease, and there will even be price manipulation if there is no control.

According to VNN