Auto prices climb as normal tax rate resumes

Automobile manufacturers have announced price increases once the value added tax (VAT) returns to normal at 10 percent as of January 1, 2010, instead of five percent as applied in 2009.

Toyota Vietnam became the first automobile manufacturer in Vietnam on January 2 to announce its new price list for 2010, revealing price increases of 20-61 million dong per car, or 4.6-5 percent.

Prior to that, on November 26, 2009, the manufacturer announced increases of 16-84 million dong, citing the higher dong/dollar exchange rate.

VAT is calculated as 10 percent of the original sale price, which means that the more expensive the cars are, the higher the tax.

In the second price adjustment within the last several months, Camry 3.5Q of Toyota has the sharpest price increase of 61.1 million dong with the sale price at 1.3339 billion dong.

The second sharpest price increase belongs to imported Land Cruiser 200, which has increased by 59.2 million dong, or 2.56 percent in comparison with the 2009’s price. In the initial price adjustment, the model increased 84.6 million dong.

This model enjoyed the import tariff decrease from 81 percent to 77 percent as of January 1, 2010. Still, Land Cruiser 200 remains the most expensive model among the 19 existing models of Toyota Vietnam at 2.3717 billion dong.

Camry 2.4G has the third biggest price increase, becoming more expensive by 44.4 million dong, followed by Fortuner V petrol engine at 42.6 million dong and Fortuner diesel engine at 35.1 million dong.

Other hot models of Toyota, including Corrola Altis, has also increased by 29.6-33.3 million dong, Vios by 20.3-24.1 million dong, Innova 25.9-31.4 million dong.

Representative from GM Daewoo Vietnam said that the manufacturer is also planning to set up a new price list with increases of 4.5-4.8 percent.

The five-seater Spark LT may rise $700, from $14,800 to $14,500 per car. Gentra will increase $900, from $19,900 to $20,800.

As such, if referring to the dong/dollar exchange rate announced by Vietcombank at 18,479 dong per dollar, Spark LT will be more costly by 12.935 million dong per car, while Gentra and Lacetti will rise to 16.631 million dong.

Representative of the car manufacturer reported that the original price of the cars remains unchanged, but buyers will pay more because of the increased VAT.

Therefore, organizations and companies will not lose money if they purchase cars after January 1, 2010, because they will still get the 10 percent VAT refund as stipulated by the VAT law.

Other automobile manufacturers may not follow Toyota’s move to raise prices so quickly in order to offset the VAT increase. Ford Vietnam, for example, maintained that it may prop up the five percent VAT increase for customers, at least through the first quarter of 2010. Three models will have unchanged prices after January 1, 2010, including Mondeo, Transit and Everest.

Other automobile manufacturers have not made any announcements thus far about their plans for price increases.