Honda Blames High Car Price on Taxes

The high tax rates that Vietnam currently applies to the automobile industry have driven up the price of Honda Civic sedans to the level that disappoints buyers in the developing country, a senior Honda official said.

 

The price of a Civic is constituted by taxes and costs and tax payment has contributed to 41 per cent of the car price, Honda Vietnam’s deputy general director Asako Suzuki said to local media.

 

A 1.8L Honda Civic costs US$31,000-32,200 while a 2.0L sedan is priced at US$37,800, still far beyond the reach of the majority of Vietnamese residents.

 

Honda is planning to build an engine assembly facility in Vietnam and raise the local parts contents in their automobiles in order to cut production costs. At present, the local parts content in a Civic is 23 per cent, which is already higher than most of other foreign-led carmakers in the country.

 

The presence of Honda Civic is forecast to threaten the domination of Toyota in the passenger car segment. Toyota is now holding some 60 per cent of market share of this segment.

 

Honda Vietnam, which is now the largest motorbike maker in Vietnam, is running a 10,000 car-a-year factory in northern Vinh Phuc province.