Post-WTO Car Market Benefits Buyers

11:11:20 AM | 11/17/2006

Car buyers will benefit from Vietnam’s accession to the WTO, which will lead to considerable import tax cut on the four-wheeler, Deputy Minister of Industry Do Huu Hao has said.

Vietnam has to cut import tariffs on automobiles right after it joins the WTO, Hao said.

The rate will fall to 47-70 per cent in 2010-2012, depending on engine sizes, from the current 90 per cent, Hao said.

The car price, which is now reported 2-2.5 times higher than the regional average, will then be equal to the regional and the world rate.

With the tax cut, carmakers in the country will be certainly affected and they must reduce price to compete with foreign ones.

However, according to Hao, they will have more chances to expand market shares and stimulate sales at lower price.

According to the Ministry of Transport, the automobile/resident ratio in Vietnam is 1/360 - an attractive figure for any carmaker.

Nonetheless, with an annual per capita income of around $500, not many Vietnamese people can afford the four-wheeler now.

The sales figures from the Vietnam Automobile Manufacturers Association (VAMA) showed that the annual car sales of its members, which are dominating the automotive industry, are around 40,000 units a year.

VAMA said its 16 member companies sold 30,934 vehicles in the first 10 months of this year, down 3 per cent year-on-year.

The following table shows tax rate after Vietnam joined the WTO.

Commodities		MFN tariff ( per cent)	WTO commitments
Commodities		MFN tariff ( per cent)	Admission tariff ( per cent)	Final rate ( per cent)	Duration
Passenger cars	With 2.5L gasoline engine upward	90	90	52	12 years
	With 2.5L 4WD gasoline engine upward	90	90	47	10 years
	With less than 2.5L engines, other vehicles	90	90	70	7 years
Trucks	Less than 5 tons	100	80	50	10 years
	Others with current tax rate of 80 per cent	80	80	70	7 years
	Others with current tax rate of 60 per cent	60	60	50	5 years

VNA

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