Taxes Drive Car Sales by Foreign Firms down 36 per cent in January

Car sales by 11 operational foreign-led automakers in Vietnam were down 36 per cent year-on-year in January to 1,517 units mainly due to local buyers’ hesitation to wait for possible price falls, according to the Vietnam Automobile Manufacturers Association (VAMA).

 

This is the 6^th month in a row foreign-invested carmakers have seen a decline in sales due to the new taxation mechanism imposed on locally-made and imported cars from January 2006, a VAMA official said.

 

Domestic car buyers feared the special consumption tax rise by 10 per cent to 50 per cent on locally made cars would force them to buy cars at higher-than-expected rates, he said.

 

In addition, the government’s decision to cut tariffs and the special consumption tax on imported sedans from January 1, 2006 to 90 per cent from 100 per cent and to 50 per cent from 80 per cent respectively, also prompted potential buyers to delay purchases in the hope of buying cars at lower prices.

 

Of the 11 operational carmakers, Toyota continued its domination the Vietnamese market. The Japanese-invested firm sold 811 cars and kept 53.5 per cent market share.

 

Toyota’s on-year sales increased 14.1 per cent due to aggressive rebates for its favorite models and the introduction of new models, including crossover vehicle Innova, said the VAMA official.

 

The US-led Ford Vietnam continued to hold second place but witnessed an 11.9 per cent on year fall in the month with sales of 267 units.

 

Vinastar, the assembler and distributor of Mitsubishi cars suffered the deepest fall by 95.3 per cent to just 16 units.

 

In an attempt to increase sales, the country’s largest carmaker Toyota Vietnam was the first to announce reductions in prices for its popular models from February 2006. However, other rivals have kept their prices unchanged.

 

Last year, foreign-backed carmakers in the Southeast Asian nation sold 35,264 units, down 22 per cent on year.

 

* The following table details car sales, market shares and the growth of the 11 foreign-invested carmakers in Vietnam in January 2006.

 

No.	Maker	Jan 06
		Sales (units)	Share ( per cent)	Growth ( per cent)
1	Toyota	811	53.5	+14.1
2	Ford	267	17.6	-11.9
3	Vidamco	111	7.3	-75.4
4	Isuzu	99	6.5	-24.4
5	Mekong	67	4.4	+97.1
6	Hino	44	2.9	+10
7	Visuco	38	2.5	-78.9
8	Vindaco	26	1.7	+85.7
9	Mercedes	21	1.4	-81.6
10	VMC	17	1.1	-57.5
11	Vinastar	16	1.1	-93.5
		1,517	100	-36