The Vietnam Automobile Manufacturers Association (VAMA) has asked the government to roll back a recent hike in luxury tax until the end of 2010 or until car sales rebound.
The luxury tax on six- to nine-seat cars has gone up from 30% to 45%-60% with effect from April 1. Cars with five seats and fewer saw smaller rises and, in some cases, even cut in the tax.
But with the economic slowdown taking a toll on the auto industry, Akito Tachibana, chairman of VAMA and president of Toyota Motor Vietnam, recently sent a petition to the National Assembly Standing Committee, Prime Minister Nguyen Tan Dung, and relevant agencies.
In his statement, Akito Tachibana asked for not only postponing the luxury tax increases but also extending a value-added tax cut through 2010 and further decreasing registration fees for vehicles with fewer than 10 seats and import tax on parts.
In February, the government halved the value-added tax on cars to 5%, with effect until December. It also halved the registration fee to 5%-6% of the vehicle price on May 1. The lower rates will also be in effect until the end of this year.
Registration of a vehicle with fewer than 10 seats now costs 6% of the price in Hanoi and 5% elsewhere.
VAMA also said in the petition that the government should offer incentives for producing a strategic car range to raise the ratio of locally-made content, lower prices to compete with imports and boost sales, and develop support industries.
The association urged the government to choose six-to nine-seat cars, which are suitable for family use, for this strategy.
April was a gloomy month for automobile manufacturers as they saw automobile sales drop dramatically from March and the same period of last year. January-April sales by the 16 carmakers operating in Vietnam fell 38% year-on-year to 29,289 units, VAMA said. (Youth)
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