Proposals on vehicle fee increase warming up Vietnam’s automobile market

Proposals on increasing registration fees by 20% in Hanoi and HCM City, raising fee of granting number plate to 10 million dong and special consumption tax on automobiles have been warming up the market.

Right after the rumours were spreading, the automobile market saw reactions. Customers were rushing to buy cars at dealers, and auto dealers also caught this chance to push prices.

Coming to auto dealers and agents at this time, customers will be consulted about expected tax and fee increases which will make car prices rise by 10% in the coming time. For which, customers may go in to buy cars immediately.

Salesmen are willing to calculate how much cost customers will have to pay more if the rumours on automobile tax and fee increases become true.

At the Kia auto dealer in Giai Phong Street (Hanoi), a Kia Forte SX with gear box assembled by Truong Hai Auto Company has a selling price of 594 million dong. If the registration fee is raised by 20%, customers will have to pay more 8 percentage points on car prices. Therefore, extra cost will be 47.52 million dong, according to a salesman. In addition to 2 million dong to be paid for taking number plate, the total additional cost will be 55.52 million dong.

For the high-class car like Hyundai Sonata (priced at 1 billion dong), the additional cost will be over 80 million dong.

Right after the information on import tariff cut of 3-4% on CBU and some automobile components, customers delayed to buy cars and expected in a reduction in car prices. But the proposals on fee and tax increases, they got shocked because an expected reduction in car prices cannot offset a rise in fee and tax increases proposed by authorities of two big cities Hanoi and HCM City.

The car market in October was quite gloomy. Vietnam Automobile Manufacturers’ Association reported that October sales of its members reached only 9,258 units, down 8% month-on-month. Compared with last October, the sales plunged 11%, in which that of multi-specialized vehicles declined 18% and commercial vehicles down 31%. Only sales of more than 5-seater cars grew 17%.

This was surprising plunge because the demand for cars in Vietnam used to increase rapidly in year end and enterprises were launching special offers with promotions. But, it is very different this year. Despite the promotion programs were given, few buyers showed up.

In fact, the proposals on automobile fee and tax increases were very valuable for dealers because more customers are rushing to buy cars this time.

A market survey in Hanoi showed that dealers raised selling prices of some models of cars and offered attractive sales programs.

The proposals on increasing registration fees and special consumption tax are stimulating the demand in car market. But, consumers still do not enjoy benefits from continuous changes in policies.