The Vietnamese government and automakers in the country are gearing up for quarrels over retail car price movements next year when the taxation on cars is amended, local media said.
The country’s carmakers announced that they would raise auto prices next year when the government increases special consumption tax (STC) on locally assembled cars to 50 per cent, effective on January 1, 2006.
Meanwhile, the Ministry of Finance and market experts said next year’s car prices will be much lower than current level because the SCT on imported cars will be lowered to the level imposed on domestic cars.
In 2006, the SCT will be 50 per cent on cars of less than five seats, 30 per cent on those with 6-15 seats, and 15 per cent on those with 16-24 seats. Currently, the SCT on cars of less than five seats is 80 per cent and on domestically assembled cars is 40 per cent.
After the National Assembly ratified the new SCT rates, an official from the Finance Ministry predicted carmakers in the country will have to lower their prices to compete with imported cars.
According to local media, car prices in Vietnam are now 1.5-2 times higher than regional countries while the average income of Vietnamese is many times lower than other nations.
The Vietnamese auto market will be changed significantly when Chinese cars get licenses to enter the country, market specialists said.
With the current income level, for most Vietnamese people, Chinese cars, which are quite cheap, are sure to be the first choice, they said.
Further, several Chinese-originated car models such as Foton and Dongfeng, which are assembled by local firms, have secured certain footholds in the Vietnamese market.
“Chinese cars are acceptable,” a driver said. “It is quite easy to repair a Chinese cars because Chinese car accessories and parts are available in all garages.”
Because of the lower car price next year, local car hunters have delayed their purchasing decisions, experts said.
For example, car registrations for circulation in Hanoi in October fell by half to 1,000 units in comparison with those in January, they said.
In October, eleven operational foreign-led carmakers suffered a 31 per cent on-year decrease in car sales to 3,358 units.
Presently, around 10,000 automobiles are kept in warehouses of foreign-led carmakers, which is an opposite trend to last year when car hunters had to queue to buy. In 2004, many carmakers reportedly reached their annual sales by September.
However, experts confessed, there will be no changes in car prices at least until the end of this year.
Pioneer, VietNamNet
Vietnamese
