Tax has not reached 0% yet, Thai cars have flooded into Vietnam

Thailand is the champion in exporting cars to Vietnam, even though the import tax on ASEAN cars will officially be 0% by 2018.

According to the General Department of Customs, the number of imported cars after the first 4 months of the year reached about 29,000 units, equivalent to a value of about 733 million USD. Compared to the same period, the number of imported cars decreased by 16.7% in volume and 16.4% in value. However, imported cars from the Thai market alone showed signs of a sharp increase, despite the general decline of the market as well as major import partners such as China and South Korea.

Specifically, in April, Vietnam imported 2,355 complete cars from Thailand, bringing the total since the beginning of the year to 10,155 cars, equivalent to nearly 183 million USD and an increase of nearly 1.5 times over the same period. Domestic enterprises also spent 191 million USD importing auto parts and components from this market. With this turnover, Thailand has become the number one car exporter to Vietnam, after ranking 4th at the end of 2015 (after China, Korea, India).

Imported cars from Thailand increased sharply while those from Korea and China tended to decrease.

A complete car importer said that Thailand has a big advantage in pickup trucks. "Currently, Thai pickup trucks are being imported massively into Vietnam and are dominating due to the import tax of only 5%. Other taxes and fees are also very low such as the special consumption tax of only 15% while other models will soon be subject to a rate of 40-130%, the registration fee is 2% while the general rate is 10-12%. However, due to the special shape, this car line is quite picky about customers," he said.

Accordingly, the best-selling pickup truck models in Thailand are Ford Ranger, Toyota Hilux, Mazda BT-50, Isuzu D-Max, Nissan NP300 Navara, Mitsubishi Triton, Chevrolet Colorado...

Ford Ranger pickup truck is a best seller in Vietnam.

According to the roadmap for implementing the ASEAN Trade in Goods Agreement (ATIGA), import tax on cars from the ASEAN region has decreased from 50% to 40%, in 2017 it decreased to 30% and in 2018 it decreased to 0%.

Other agreements such as the Trans-Pacific Partnership (TPP), the Free Trade Agreement with the EU, South Korea, etc. all commit to eliminating tariffs on cars, but over a period of more than 10-15 years. Countries with developed auto industries such as Thailand and Indonesia are directly benefiting from the reduction in import tariffs.

According to the new Special Consumption Tax Law, cars with a capacity of less than 1.5 liters will be reduced from 45% to 40% from July 1 and to 35% in 2017. Cars with a capacity of 1.5 to 2 liters will be reduced to 40%. Along with the elimination of import tax, the reduction in special consumption tax has created a great advantage for Thai car exporters. It is forecasted that in 2018, Vietnam will become a large market for cheap cars from Thailand with an average price reduction of up to 40%.

By the end of 2015, Vietnam had about 2.5 million vehicles, the ownership rate is still low compared to other countries in the region. According to the Road Transport Development Plan to 2020 and orientation to 2030, the whole country will have about 3.2-3.5 million vehicles. Therefore, Vietnam is considered an attractive market for foreign giants.

According to Vnexpress