Consumers wait to purchase cars on new tax cuts

New tax cuts on car imports, released by the Ministry of Finance last week, will spell benefits for car buyers from January 1.

Under the new tariffs, the import tax on vehicles with less than nine seats with cylinder of 1.8-2.5 litres will be cut to 82 percent from the current 83 percent.

Cars with a cylinder of more than 2.5 litres will be shaved to 77 percent from the current 83 percent, the substantial rate cut.

The new rate for four-wheel drives will be lower at 72 percent for 77 percent now.

The ministry’s latest move is gradually to meet Vietnam’s commitments to the World Trade Organisation (WTO) and Asean.

According to WTO commitments, vehicles will attract a tax rate of 83 percent next year while the rate committed to Asean is 70 percent.

The new tax cut for import cars has driven domestic car importers into a hurdle as most consumers would now wait for next year to purchase cars, according to industry insiders.

Car importers said that they did not anticipate that the car import tax would decrease as of January 1, 2011, therefore, they accidentally imported cars sooner than they should have.

Importers last Friday said that they were only informed about the new tariffs on the same day it was announced. Some, up till Monday, have yet received official documents about the new tax cut.

Meanwhile, the imported cars are en route to Vietnam already and they are likely to arrive soon, so the importers said they have decided to keep the cars at the arrival ports and will request customs clearance after January 1, 2011 to enjoy the new lower tariffs.

Car importers also said that they could never have imagined that the ministry would slash import tariffs more than previously planned.

The unexpected tariffs cuts have put car importers and dealers on the offensive, because they can set up their business plans most properly.

Director of a car trading company in HCM City told newswire Vnexpress that after hearing the news about the tariffs, he has been like a cat on hot bricks. He has ordered his business division to analyse the new tariffs to determine the impacts of the new tariffs on sale prices, so that he can both adjust sale prices and adjust business plans.

The director has affirmed that his company will only receive import cars after January 1, 2011, because he does not want to purchase cars now and pay higher taxes.

The businessperson told the newswire that every day, he will have to pay 500,000 dong in the storage fee. If every container can contain two cars with a cylinder capacity of less than 2.5 litres, he will have to pay the total fee of 10 million dong in storage fee for 20 days.

The owner of a Hanoi-based car trading company also told the newswire that a consignment worth tens million dollars of his company is arriving in ports in a few days. His company would rather pay fees to keep those imported cars at the ports rather than paying higher taxes.

“Buyers always expect sale price reductions when they hear about the tariff cuts. However, the problem is that we still have the cars which were imported before and imposed the old tariffs, and we cannot slash sale prices of these products,” he complained.

The imported car market will be very quiet in the last days of the year. Therefore, instead of leading customers to car showrooms, importers would lead them to the ports, where customers can see cars in person to make decisions, he added.  - Tuoitre

Tags: Vietnam automotive, Vietnam automotive industry, Vietnam autos market, Vietnam car imports