CBU car imports on the rise

The domestic car market will see a rising inflow of complete-built-unit imported cars on the back of lower import tariffs next year.

The Ministry of Finance lately announced that from 2011, complete-built-unit (CBU) cars’ import tariffs will stand at between 72-82 per cent from current 77-83 per cent depending on vehicle lines.

The tax levels are expected to further go down as the 2018 deadline for Vietnam to exempt cars from paying import duties under common effective preferential tariffs within the ASEAN free trade area (CEPT/AFTA) scheme getting closer.

In recent talks with VIR, a representative from the Vietnam Automobile Manufacturers Association (VAMA), said that many auto firms would shift into CBU car imports in the forthcoming period instead of assembling units in the country.

Toyota Vietnam and Mercedes Benz Vietnam are two auto joint ventures which have tried importing CBU cars.

Japan-backed Honda Vietnam recently unveiled it would start importing a luxury mid-size model Honda Accord for sale in Vietnam from 2011. It even stopped assembling Toyota Landcruiser in Vietnam and shifted into importing the car for sale.

Currently, Honda Vietnam assembles four-seater sedans Civic and five-seater sport utility cars CRV at its Vietnam-based factories.

With Mercedes Benz Vietnam, many car models that were showed off in the recent Vietnam Auto Expo 2010 were CBU cars. Cars which are assembled in Vietnam only represent a small fraction among cars currently sold in the Vietnamese market by the Germany-backed auto firm.

Last year saw booming CBU car imports with 80,596 units imported into Vietnam, double 2008’s level, generating $1.26 billion in total import value.

Rising CBU car imports in 2009 partly stemmed from the fact that from that year sole car distributors and auto joint ventures were given the green light to import CBU cars.

CBU car imports contracted in 2010 following the government’s strong measures to curb rising trade deficit through limiting the import of luxury goods, including cars. Consequently, just 46,940 CBU cars were imported in the first 11 months of 2010, half of 2009’s level, bringing in a total import value of $856 million.