Motor show – it’s not easy being green in Vietnam

The Vietnam Motor Show 2009 officially closed on November 23 afternoon after an exhibition that was just a little greener in its ambitions.

While greener hybrid cars are already huge sellers overseas – such vehicles are yet to catch on in Vietnam as high prices put them out of reach of most car consumers.

As yet there are no tax breaks to encourage people to seek out greener cars. Government agencies are reported to still be having difficulties in defining the ratio of petrol and electricity use to set up tax rate guidelines.

Thoi bao Kinh te Vietnam quoted a deputy chairman of Nissan group as saying that Nissan really wants to bring electrical cars to Vietnam, however, to date, the automobile manufacturer still has no government approval.

Other reasons given for the slow take up include poor infrastructure including electricity providers.

It is believed, therefore, the fact that four Vietnam Automobile Manufacturers’ Association (VAMA) members, Toyota, Mercedes Benz, Mitsubishi and Honda introduced four green car models at Vietnam Motor Show 2009 was that they wanted to send a message to domestic transport policy makers.

However all that glittered wasn’t all green at the show. Toyota’s Avanza was on show at the exhibition and with it seating up to nine people it’s not exactly a nippy, low environmental impact vehicle.

However its size mirrors the “strategic” thinking of the Vietnamese Government who are ready to back certain models which they believe reflect local needs.

With this type of car judged to be reflecting the official strategy it will have the lowest luxury tax rate of 30 percent on the car line (rates on other car lines are 45-50-60 percent).

It is also likely to have an ownership registration tax of two percent and VAT of five percent (10 percent is imposed on other kinds of vehicles).

Meanwhile, the manufacturers will enjoy either corporate income tax reduction or exemption and will pay zero percent tax for imported machines and equipment for production of the strategic car line.

It is not by chance VAMA decided to organize the exhibition at the end of the year. The usual end-of-year rush is further enhanced. There is an even greater rush this year as people look to buy before December 31, 2009, when current tax incentives end.

Vietnam Motor Show 2009 has seen the biggest ever number of cars on display. Especially, these include new models which manufacturers are planning to market in the time to come, such as Mercedes-Benz C250 CGI Blue Efficiency, S-Class 2010 and SLK200K, E63 AMG; Ford Fiesta; Toyota Avanza and Mitsubishi Lancer.