Prices of cars remain unchanged in spite of excessive supplies

With massive import, automobile supply in domestic market has been excessive; however, most of automobile manufacturers still keep their prices unchanged and only offer small discounts on unsalable car models.

Prices of cars remain unchanged in spite of excessive supplies

The latest statistics by the Vietnam Automobile Manufacturers Association (VAMA) showed that in the past eight months, its members have sold nearly 21,500 cars. Of which, passenger cars were around 15,200 units and commercial cars were nearly 6,000 units. Noticeably, the automobile market has been seeing robust rise of imported cars.

Updated data by the General Department of Vietnam Customs showed that the number of completely-built-unit imported cars since the beginning of this year to the end of August reached 96,000 cars, worth US$2.1 billion, up 229 percent in volume and 205.6 percent in value over the same period last year.

Of which, the majority of imported cars was less-than-9-seater passenger cars which accounted for 72.8 percent of total imported cars, an increase of 652 percent over the same period last year, and was imported from countries in the ASEAN, such as Thailand and Indonesia.

It is recorded at automobile salons in Ho Chi Minh City that although the market is entering the peak shopping season, thanks to plentiful supply, there is no situation that customers have to wait for a very long time or prices are highly raised as it was in 2018.

Besides, under pressure caused by imported cars, many domestic automobile manufactures have launched promotional campaigns to boost demand however, discount levels are insignificant.

For instance, although the manufacturer applied several policies, including special price, discounts for Peugeot 3008 and Peugeot Traveller models were merely at VND50 million.

Since the beginning of September, Toyota Vietnam has also adjusted prices of some its car models, including Altis, Fortuner and Innova, twice but reductions were merely VND40 million-VND60 million per car. Similarly, Honda Vietnam gave a gift card worth VND10 million for customers when they buy its Honda CR-V or HR-V models.

Car models of Mazda are considered to have highest concessions on price, accessories and maintenance but discount level also stopped at VND100 million for its CX-5 model in this September.

‘After the lunar New Year or the seventh month in the lunar calendar, automobile manufacturers usually run promotional campaigns boisterously. However, only carmakers know the nature of their discounts. As the current lowest price of a new car in Vietnamese market is VND500 million. Therefore, a discount of a few tens millions Vietnamese dong for a VND1-billion car is insignificant while import tariffs on cars imported from countries in the ASEAN have been cut to zero percent,’ said Mr. Tran Van Muoi, director of Tien Phat Limited Company in District 12.

In fact, the dream to buy cars at low prices of Vietnamese customers hardly comes true even when import tariffs from countries in the ASEAN have been reduced to zero percent for nearly a year.

Even Vinfast, a Vietnamese carmaker, also sells its cars at fairly high prices. Therefore, it is legitimate if customers question the honesty of promotional campaigns of domestic automobile manufacturers.

In addition, the fact that ministries and departments are proposing the Government to continue to give preferential treatment for automobile industry made the public suspect the transparency and whether there are advocacy groups or not.

Particularly, recently, the Ministry of Industry and Trade made a report on the Vietnamese automotive market after the multilateral free trade agreement between countries in the ASEAN took effect and at the same time proposed the Prime Minister to entrust the Ministry of Finance to study and bring out specific solutions for tax policy.

Accordingly, the Ministry of Industry and Trade proposed to refund value-added tax (VAT) within three months for imported machines, equipment to create fixed assets. As for special consumption tax, the ministry proposed not to apply special consumption tax for the VAT generated domestically as for automobile manufacturing and assembling so as to reduce cost prices of cars. 

Especially, the ministry proposed to adjust import tariffs to zero percent for some important details of less-than-9-seater car models, such as engine and gear box until 2025, apply zero percent tariffs on machines, equipment, molds and jigs imported to create fixed assets and give tax exemption on goods imported to serve as model for researching, adjusting and assembling production line for automobile manufacturing. The ministry also proposed the highest preferential corporate income tax for projects producing supporting industry and automobile products.

Regarding the ministry’s proposals, many experts said that increasing more preferential policies is only a temporary solution instead of a long-term and stable strategy for automobile industry and unable to encourage enterprises to actually participate in production. As at the present, Vietnam has joined the international integration, the country must comply with the general rules, avoiding setting regulations to protect domestic enterprises and ensure the ultimate purpose which is to serve domestic consumers.

By Lac Phong – Translated by Thuy Doan

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