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Tariff cut to 0%, car market expects boom in sales

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On January 1, 2018, the luxury tax on some car models with small cylinder capacity was reduced and the import tariff on ASEAN sourced cars was cut to zero percent.

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The Vietnamese market will be very competitive

 

Quoc Dinh, 38, in Thu Duc district, HCM City, said he had been waiting for the tax cut for half a year and has placed an order with a car dealer. The delivery will be made in early 2018.

“The Vios that I ordered has a new selling price which is VND48-58 million cheaper than before. Though the price decrease is not as sharp as expected, I still feel happy with the purchase,” he said.

Anticipating higher demand after January 1, importers have increased the number of cars. According to the Hiep Phuoc Port’s customs agency, about 1,700 cars under nine seats and pickups have docked at the port, a threefold increase.

Bui Xuan Truong, director of Truong Thanh Automobile, said if importers make customs declarations prior to January 1, a car with the import price of $10,000 would have post-tax price of $20,000. However, after January 1, the price would be $15,000.

Truong commented that Thailand and Indonesia will get the biggest benefits from the tariff cut because they have many car models which have ASEAN-made content ratio of at least 40 percent.

He also predicted a boom in the car market in 2018. “Once the imports from ASEAN are cheaper, other manufacturers will also have to slash prices. This will help stimulate demand,” he explained.

As for the new luxury tax policy, effective since January 1, it sets higher tax rates on big-size models and lower tax rates on models with small cylinder capacity. 

With the tax rate of 60 percent on 2.5-3.0L models instead of the previous rate of 55 percent, luxury cars would see prices increase by nearly VND100 million.

Meanwhile, the luxury tax on 2.0L and smaller car models will be lowered by 5 percent to 35 percent.

According to Pham Minh Vu, a car dealer in HCM City, some automobile manufacturers in Vietnam have announced sharp price cuts for 2018. Hyundai Thanh Cong has announced a price cut of VND20-40 million for Hyundai Grand i10, while Toyota Vietnam’s products have seen prices fall by VND24-58 million.

Analysts believe the Vietnamese automobile market will be very competitive after 2018, while the small-size market segment will be the busiest. The car models will be equipped with the most advanced facilities, but the prices will be reasonable.

 

 

Source: VietNamNet

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