With many new regulations, the auto market is about to fluctuate strongly.

The draft Decree regulating business conditions for automobile manufacturing, assembly, import, warranty and maintenance, drafted by the Ministry of Industry and Trade, has introduced many new business conditions that automobile businesses will have to comply with.

Remove genuine authorization

The new draft stipulates that automobile manufacturing, assembling and importing enterprises must implement warranty and maintenance policies for customers; be responsible for recalling automobiles when they have technical errors, violate regulations and standards, and pay for the recall costs.

For automobile manufacturing and assembling enterprises, it is necessary to ensure the conditions of facilities such as factories, assembly lines, welding lines, painting lines, product quality inspection lines and vehicle testing tracks; own automobile warranty and maintenance facilities; ensure conditions of safety, labor hygiene, fire prevention and fighting; protect the environment and ensure product quality.

From July 2017, automobiles will become a conditional business. That is, in addition to regulations on vehicle inspection, records, and business licenses, businesses must meet the conditions set by the authorities to be allowed to do business.

Enterprises with automobile manufacturing and assembly projects that have been confirmed before the effective date of this Decree may continue to operate for a period of 3 years. After this period, enterprises must comply with the provisions on automobile manufacturing and assembly conditions in this Decree.

For automobile importing enterprises, they must be granted an import code by the Ministry of Industry and Trade; have a department to manage automobile import activities, manage sales, warranty and recall of automobiles; have an area to store imported automobiles; have warranty and maintenance facilities suitable for the type of imported automobiles.

For businesses providing auto warranty and maintenance services, they must meet the requirements on premises, equipment, tools, human resources, and quality management systems for auto maintenance and repair facilities as prescribed. The Ministry of Transport shall issue a Certificate of Auto Warranty and Maintenance Facility. The certificate is valid for 3 years from the date of signing.

Thus, with this draft, automobile manufacturing and assembling enterprises will have to add an important condition of having a test track of at least 500m long, ensuring technical requirements to check the quality of manufactured and assembled vehicles before leaving the factory.

For automobile importing enterprises, it is no longer necessary to have a genuine Authorization Certificate for vehicle distribution in Vietnam as stipulated in Circular 20 previously. To be granted an automobile import code by the Ministry of Industry and Trade, enterprises only need to submit a Business Registration Certificate, or Enterprise Registration Certificate, or Investment Certificate and documents proving that they have a facility for automobile warranty and maintenance that meets the regulations.

The Decree also stipulates 3 options for ownership of warranty facilities for automobile importing enterprises, including: Warranty and maintenance facilities that are 100% owned by the enterprise, owned by at least 30% by the enterprise, and signed a lease contract.

As for automobile warranty and maintenance services, enterprises that do not provide warranty and maintenance services to automobile manufacturing, assembling and importing enterprises are not required to comply with the provisions of this Decree.

Car trading and importing enterprises are waiting for the Government to issue new car trading conditions.

Businesses waiting

Since November 2016, automobile business has been classified as a conditional business, but up to now, the conditions for automobile business have not been established, causing great concern for businesses. Before the upcoming meeting with the Prime Minister and businesses, the Automobile and Motorcycle Industry Working Group of the Vietnam Private Economic Forum (VBF) has sent a petition to the Prime Minister and members of the Government requesting the urgent establishment of business conditions for the automobile industry in accordance with regulations.

According to VBF, from July 2017, automobiles will become a conditional business. That is, in addition to regulations on vehicle inspection, records, and business licenses, businesses must meet the conditions set by the authorities to be allowed to do business.

However, less than 2 months before the deadline for implementing the Law, ministries, branches and competent agencies have not yet provided conditions and criteria to guide businesses, making it impossible for businesses to be proactive in their business activities.

VBF recommends that the Ministry of Industry and Trade and the Ministry of Transport coordinate with relevant ministries and enterprises to establish necessary, feasible and transparent business conditions for the production, assembly and import of vehicle engines as soon as possible.

Many businesses that trade in unofficial imported cars also said they are eagerly waiting for the Decree regulating the conditions for car trading.

“Recently, a series of non-genuine car import businesses have had to temporarily suspend operations due to the requirement of having a genuine Authorization Certificate. We are currently waiting for the Government to issue new car business conditions, so that we can see whether we can continue to import cars or not, and what standards we must meet to do business. As July 1, 2017 is approaching, businesses are very worried because they still have to invest in facilities for business activities, otherwise they will be very passive,” said Mr. Nguyen Tuan, Director of Thien An Phuc Company Limited.

According to VNN