Car sales in September plummeted, according to the Vietnam Automobile Manufacturers’ Association (VAMA).
While the new car market has witnessed a downward trend in sales and selling price, the used car market is, however, quite busy, even though the car import tax from ASEAN will be reduced to zero per cent from January 1, 2018. — Photo baoquangninh.com.vn
VAMA’s report revealed 21,216 units were sold, down four per cent from the previous month and down 20 per cent against the same period last year. The sale included 11,637 passenger cars, 8,700 commercial vehicles and 879 special purposed vehicles.
Domestic car production reached 14,739 vehicles, down five per cent from the previous month and the number of imported vehicles was 6,477 vehicles, decreasing by two per cent from the previous month.
Cumulative total sales of the whole market in the first nine months of this year reached 198,246 units, decreasing by eight per cent over the same period last year.
Used car market
While the new car market has witnessed a downward trend in sales and selling price, the used car market is, however, quite busy, even though the car import tax from ASEAN will be reduced to zero per cent from January 1, 2018, which is expected to have a significant impact on the domestic car market.
However, this is not worrying second-hand auto businesses because their trade is just buying and selling in the short term.
On streets in Hanoi, including Duong Dinh Nghe, Nguyen Chanh, Pham Hung, Le Van Luong and Nguyen Van Cu, that have showrooms selling used cars, a variety of cars and brands are sold — from cheap cars such as Kia Morning, Hyundai Grand i10 and Hyundai Getz and popular cars such as Toyota Vios, Kia Cerato, Honda Civic, Toyota Fortuner and Ford Ranger to luxurious cars like Rand Rover, Lexus and Audi. The price depends on the car model and quality.
Several owners of showrooms on Le Van Luong and Nguyen Van Cu streets told Vietnam News Agency that the race for reducing prices of new cars among auto businesses from dozen of millions of đồng to hundred million đồng had caused a headache for used car showroom owners. The price reduction of new cars has forced businesses to lower the price of used cars to get the “nod” from customers.
Nguyễn Nhất, owner of the Ha Dong Automotive Salon, said with the declining trend of import tax on complete built-up units, businesses raced to reduce prices of used cars — both new and old models — to win market share and prepare for the new business period.
An employee of the Sàn Ô tô Thủ đô Automotive Salon said prices of new cars had dropped continuously since the beginning of the year, while the prices of used cars also decreased significantly from 10 to 15 per cent.
The employee said more than 30 cars were sold per month on average, not decreasing much in comparison with the same period last year. From all the segments of cars available in the salon, the segment of cars worth VNĐ400-500 million (US$17,566-21,958) sold the best.
According to business calculations, second-hand cars, which were used for two or three years, are always priced at 70-80 per cent of the cost of a new car. In addition, the registration fee for a used car is only two per cent, while it is 12 per cent for a new car.
However, buying a used car is completely different from buying a new car. Customers will have nothing to be concerned about when they purchase a new car, while in the case of a used car, it is difficult for them to assess the quality and price. The quality of used cars depends on many factors, such as how the owner maintained the car, if it was damaged in floods or involved in an accident or if its parts were changed.
Businesses said with January 1, 2018 approaching, although the import tax on new cars from ASEAN to Viet Nam would reduce to zero per cent, the price of new cars would be unpredictable because relevant agencies had not yet issued business conditions in this field.
In addition, under pressure to boost infrastructure, the Government would take measures to restrict personal vehicles, as a result of which other taxes and fees of cars could be increased, causes the price to rise.
Meanwhile, according to the finance ministry’s draft decree replacing Decree 122/2016 related to preferential import tariff, the import tax on used vehicles will sharply increase from January 1, 2018. Accordingly, cars with nine seats and less and engine displacement of below 1,000cc will be taxed at US$10,000 each, $5,000 higher than the current rate.
Vehicles with engine displacement of 1,000cc to less than 2,500cc will be subject to a varied tax rate of 200 per cent or 150 per cent plus $10,000.
According to calculations, this new tax rate is more than two times higher than the current rate, making the price of a used car more expensive than that of a new car. The import of used cars will, thus, be on their way out in Viet Nam. As for the domestic used car market, it’s usually buying and selling in the short term, hence, businesses are not very concerned about the change of tax and fee policies.