Car importers knocked sideways by forex rates

The local currency’s devaluation spells bad news for car importers in coming months. Last week, the price of imported Toyota cars was increased by up to VND101 million ($4,900) after the State Bank bumped the reference USD/VND forex rate’s mid point to VND20,683 per dollar.

Meanwhile, BMW Euro Auto did not change its price because it has applied new selling prices since the beginning of 2011 with the hikes in the range of VND100-500 million ($5,000-$25,000) per car, to match the inofficial market forex rate.

BMW Euro Auto general director Horst J. Herdtle claimed the devaluation of the dong affected his company’s business plan.

“We will try to have a more successful business year in 2011, but our expectations depend much on the devaluation of the dong.”

Last year, BWM Euro Auto enjoyed a 25 per cent sales growth.

A salesman at Thien Thanh auto salon in Ho Chi Minh City’s District 10 told VIR that imported car prices were vulnerable as importers used hard currencies to pay for shipments.

In addition, registration fees for cars with fewer than 10 seats have been proposed to rise from 10 per cent to 15 per cent of the vehicle’s purchase price for Hanoi, and from 12 per cent to 20 per cent for Ho Chi Minh City, according to a decree draft designed by the Ministry of Finance. The draft is receiving input from concerned state bodies.

In the first half of last year, the businesses of cars makers and importers were almost frozen due to big hikes in registration fees. Registration fees in Hanoi and Ho Chi Minh City doubled to 10 and 12 per cent, resulting in a 10 per cent jump in the selling price of cars.

Porsche Vietnam marketing manager Cao Ngoc Nguyen Duy said that if the decree draft was approved, it would impact negatively on the selling price of car importers.

“Porsche Vietnam planned to get a 30 per cent growth rate in 2011, but there are unpredictable factors that can affect our business,” Duy said.