Car dealers can make super profits

Car dealers keep complaining that higher taxes and fees would make them take loss and give up the career. However, in fact, car dealing remains a highly profitable business.

40,000 or 50,000 dollars (800 million-1 billion dong) are the profit a car dealer can pocket when selling an import car. This is a “super profit” level which is the dream of the businessmen in other fields.

Pays 1 dong, sells at 10 dong

Every time when the government decides to impose higher taxes or apply the policies to tighten the car imports, car dealers would complain that the new decisions would put big difficulties for their business, and that they would incur big losses with the new policies. However, in fact, they do not take loss.

The government, in an effort to curb trade gap and fight against inflation, has raised the import tariff and ownership registration tax on complete built unit (CBU) cars. However, Dung, who once worked for a car import company, affirmed that the higher taxes would only lead to the lower profits of enterprises, while car importers would never take loss.

He went on to say that once the taxes increase, car dealers would raise the sale prices; therefore, they will never incur losses. “The profit in selling one import car is big enough to pay workers and maintain the company’s operation for one month,” he said.

Car import companies have 1001 tricks to avoid tax. Several years ago, when car dealers sold a Kia Morning at 17,000-18,500 dollars, they declared the import price at 3800 or 4500 dollars only. Especially, if car dealers got customs clearance in small provinces, the declared taxable prices would be much lower. Once the taxable value was low, the tax importers had to pay would be modest.

The customs agency in Ninh Binh province, for example, once cleared the consignment of Kia Mornings with the declared taxable price of 3100 dollars per product.

The profits would be much higher when selling luxurious cars. HY, the owner of VN car showroom, said that in the “golden age”, a Porsche Cayenne was imported at 100,000 dollars, and if counting on fees and taxes, the car would be valued at 250,000 dollars. Meanwhile, the car could be sold at 290,000 dollars.

Also according to HY, the import prices were always adjusted by the importers after considering the market demand and the tax rates. Therefore, it would not be a surprise if car dealers can pocket tens of thousands of dollars for every car sold.

Car dealers play tricks to avoid tax

In general, the prices shown in the invoices are always lower than the actual prices. Explaining this, car dealers would say to buyers that the lower declared prices would have customers reduce the ownership registration tax they have to pay. However, in fact, this is just a trick played by car dealers to avoid tax.

There are two reasons that prompt car dealers to declare low sale prices. Firstly, they want to reduce the corporate income tax they have to pay. If they report the low sale prices, the turnover and pretax profits would be low, which allows them to pay low tax sums.

Secondly, this would allow them to escape from the strict supervision of the taxation and customs agencies, if the sale prices are low.

T from HA Car Import Company on Nguyen Van Cu Street in Hanoi said that in the golden age, the company sold 30-40 cars a month, which allowed the company’s owner to pocket fat money. Meanwhile, the income of sellers was also “very satisfactory” at tens of millions of dong a month, depending on the numbers of cars sold.

DK, an officer of VA showroom on Le Van Luong Street said that not only sellers can make fat profit from car sales, but the business also brings high income to relating officers. For example, the person who is in charge of tax declaration and payment would earn 1-2 million dong from every car. Meanwhile, the man who bridges clients and banks and follows necessary procedures would also earn 1 million dong.