Taxes and Charges Sending Automobile & Motorcycle Manufacturers into Difficulties

Draft Scheme "Limitation on personal vehicles engaging in transport in big cities" of the Ministry of Transport has been recently launched applying the tools of tax imposed and high charges and management to limit the number of personal vehicles.

 

According to the draft, the Ministry of Transport will make adjustments to the special consumption tax and registration fees. Simultaneously, the ministry will adopt additional regulations such as quotas on newly-registered vehicles for each city so as to ensure harmony with the development of the city's infrastructure. The cities only grant a limited number of registrations for new vehicle each year.

 

According to the calculation, currently, in order to get a car, the end-users have to pay taxes and fees accounting for 60 percent of the unit cost. Rates for domestically manufactured and imported motorcycles are 20 percent and 50 percent respectively. Currently, the automobile and motorcycle markets are suffering from various taxes and fees. There are 8 kinds of taxes and fees imposed on cars, let alone road transport fee applied to cars and motorcycles in the coming time.

 

Not being much reliant on the modestly supportive policy of the State, the automotive and motorcycle industry themselves have no resort but to seek to demand stimulus promotions.

 

Automotive businesses revealed that the low purchasing power plus the likelihood of decline push them to heat up the market by aggressively lowering prices. Truong Hai Company said it would reduce prices, depending on the model. In addition, there are promotion programs for some kinds such as Ford, Mercedes, Vina Mazda...

Motorcycle production enterprises also launch a series of promotion programs. Piaggio has launched the promotion until the end of October, 2012, supporting 100 percent of the registration fee (equivalent to VND1.3 - 6.8 million depending on the location) for a number of products. Honda Vietnam extends the promotion time for Air Blade motorcycle with the support of 100 percent of the registration fee, equivalent to 2 percent - 5 percent of the vehicle’s value. Yamaha Vietnam also first launched promotion to support 100 percent of the registration fee for the buyers of Jupiter with prices reducing by an amount of VND472,000 – VND1,390,000.

 

Regardless of the efforts of car manufacturers, the number of newly-registered cars is dramatically declining. In Hanoi, in August 2012, the number of newly-registered vehicles was only 123,000 units, a decrease of 50 percent from the same period last year. The number of newly-registered cars and motorcycles were only 12,000 units and over 100,000 units, a decrease of 50 percent and 47 percent, respectively, from same period last year. According to some experts, this situation is expected to continue for the next few months.