Auto manufacturers threaten to raise prices because of expensive dollar

The dong/dollar exchange rate increase has caused concerns in the car industry.

The official dong/dollar rate announced by the State Bank of Vietnam (SBV) rose from 17,000 dong to 17,034 dong per dollar over the last 45 days, since October 10.

On November 25, the exchange rate quoted by commercial banks was 17,886 dong per dollar, while in the black market, the dollar price was 19,830 dong.

Members of the Vietnam Automobile Manufacturers’ Association (VAMA) said the dollar’s continued increases had certainly influenced both domestically assembled and import cars, though the influences vary.

As for domestically assembled cars, the more expensive dollar has made import prices of car parts for domestic assembling increase, thus pushing up production costs and car sale prices.

However, to date, VAMA’s members still have not raised sale prices because of strict pricing policies.

In fact, manufacturers are still selling cars assembled from the car parts already imported while the dollar price was still low. Cars assembled with parts imported one month ago, when the dollar price began increasing, will only appear on the market in months to come.

However, a manufacturer said that after the announcement by the State Bank of Vietnam on November 25 on raising the official dong/dollar rate, manufacturers may have to adjust the car sale prices to ensure profits. However, he thinks that price increases would not be too big.

Meanwhile, import cars are proving to be more influenced by the dollar price increase than domestically made cars.

Local newspaper Thoi bao Kinh te Vietnam has reported that import models have seen price increases of 500-3,000 dollars per unit.

Importers have blamed increases on higher taxable prices set by customs agency and a higher import price.

A Ford car, manufactured in the US, for example, has the price at $20,000 in the US. If Vietnamese companies imported the car at this moment, they would have to pay 17 million dong more than the sum they had to pay if they purchased the car prior to October 10, due to the exchange rate increase.

The biggest headache for car importers is setting sale prices at reasonable levels allowing them to import models that can are competitive with VAMA made cars.