Luxury cars imported to Vietnam may increase in price from 2018

Previously, only the first vehicle imported into the country had to be inspected. However, according to the new regulation, each batch of vehicles arriving at the port must select one vehicle for inspection, even if the vehicles in all batches are the same type.

Decree 116/2017 of the Government regulating the conditions for production, assembly, import and business of automobile warranty and maintenance services is causing many concerns for the four-wheel industry. Importers are worried that they will not be able to pass the strict regulations to import cars into the country. But even if they can get through the narrow door, they may still face difficulties due to increased costs in the inspection process.

If previously, only the first car imported into the country had to be inspected, according to the new regulations, each batch of cars arriving at the port must select one car for inspection, even if all the cars in each batch are the same type. For example: in early January 2018, Lexus imported a batch of 10 RX350 cars, and in mid-January, another batch of 3 RX350 cars arrived, each time one car had to be selected, meaning two cars had to be inspected, even if they were identical.

This method increases the company's costs, and also takes longer to "hold" the car before delivering it to the customer.

Increased inspection costs, increased vehicle prices

Each vehicle inspection will cost the company about 100 million VND and the waiting time is about 1-2 months.

A batch of one car or 100 cars will cost the same amount of inspection. For popular car companies importing large quantities of several hundred to thousands of cars at a time, the cost per car will not be much, so it will not increase the selling price. But for luxury cars, the story may be different.

Luxury cars are at risk of increasing in price due to batch inspection fees.

Many luxury cars only arrive in a few batches, so the above amount will be a significant amount per car. For example, a batch of two Porsches arrives, each car carries a 50 million burden, the price of the car increases by 50 million. Not to mention, the long time the car is held also increases the cost of being in the port, warehouse and makes customers upset.

"The more we spend, the more money our customers spend," said the head of an official importer. The company's profits must be guaranteed, so it is unlikely that the company would sacrifice profits to sell to customers at a lower price.

Are inspected cars sold to customers?

Besides increasing car prices and waiting time, according to experts, inspecting each batch of cars also causes many inconveniences for customers.

Previously, for big brands like Mercedes, Lexus, Audi... cars were imported in large quantities. The cars used for inspection with the Registration Office would later become the company's test cars, part of the marketing costs. The cars delivered to customers would be completely new.

However, there are some specialized car lines, which are sold in small quantities, only a few dozen or 1-2 cars per year, customers will usually be notified in advance that the car must undergo emissions, brake, throttle, engine testing... by the Registry. If the customer agrees, the company will import the car.

In fact, the vehicle inspection agency in Vietnam is quite simple. The vehicle is transported from the manufacturer to the inspection location, and is actually driven around the test site a few times to check emissions, brakes, engine, etc.

Some companies are more sophisticated, wanting the most realistic results, often running a car for about 3,000-5,000 km, then using this car for inspection. At this time, the results are the most accurate. Cars that have run a significant number of kilometers like this are often used as test cars or for internal business use. There are also cases where the details after the inspection process are worn out, the company will evaluate and propose a detailed replacement plan, re-inspecte before selling to the market. This method also increases costs.

With the new regulations on batch inspection, most companies believe that this method will cause difficulties for businesses whether importing a few cars or a few hundred cars. These problems directly affect the selling price of cars on the market.

Meanwhile, many customers are concerned that car prices are not only increasing due to inspection costs but also because the market is getting narrower. The new policy framework in Decree 116 is too surprising when there are only more than two months left. If there are no changes or adjustments to suit the reality, foreign imported car businesses will close down.

Not only that, even the official importers are having more difficulty bringing cars into the country. The luxury car market is narrower, the brand that is well prepared in terms of quantity, type, and origin of cars will have the advantage in the race. In a market with limited supply, price regulation is no longer due to market rules, but to the will of businesses.

According to VNE