Vietnam car makers unhappy with chosen strategic model

Vietnam’s national car association has expressed its disapproval of a recent proposal by the Ministry of Industry and Trade to promote cars with 6-9 seats and small engines as the country’s strategic product line.

The Vietnam Auto Manufacturers’ Association said in a letter to the government that while it was necessary to identify a priority product line to develop for the local car industry, the association did not agree with the ministry’s choice.

The association said the selection of Vietnam’s strategic car line was a matter of great importance that needs more discussion and research.

It suggested the government set up a research group for such a task. The group would need more time to come up with a final proposal and the deadline should be the end of March next year, the auto association said.

In a proposal submitted to Prime Minister Nguyen Tan Dung last month, the Ministry of Industry and Trade said it has chosen cars with 6-9 seats and engines smaller than 1.5 liters as they could be used for different purposes while consuming less fuel than other models.

The sooner-than-expected decision ended the ongoing debate among local manufacturers over which car model should be chosen to be the focus for future development and benefit from various tax incentives. For example, the luxury tax rate on this car line would be 30 percent for the strategic line compared with the usual 45-60 percent.

The ministry’s proposal has since sparked a major debate among analysts and manufacturers. According to experts, it is not a practical proposal as small engines would not work on multi-purpose cars of 6-9 seats.