Rumor on ownership registration tax heating up auto market

The automobile market has heated up after a long frozen period, following the news that the Hanoi and HCM City authorities may raise the ownership registration tax to 20 percent, while the car number plate granting fee may rise to 10 million dong, and the luxury tax would also increase.

Increasing fees frightening clients

If dropping into auto showroom these days, one would be told by the salesmen that a lot of kinds of tax would be raised with an aim to restrict personal vehicles, and that it would be better to buy cars right now, or he would have to spend 10 percent more on the cars when the taxes increase.

The salesmen of a showroom on Giai Phong Road in Hanoi said to a client that a Kia Forte SX assembled by Truong Hai Corporation is now priced at 594 million dong. If the ownership registration tax increases to 20 percent as proposed, clients would have to pay 8 percent more, or 47.52 million dong. If counting on the sum of 8 million dong clients will have to pay to get car number plates (now 2 million dong), the total additional sum of money they have to pay will be 55.52 million dong.

Especially, the sums of money buyers have to pay for cars would be much higher for luxury models. If buying a Hyundai Sonata, for example, which is priced at one billion dong, one would have to pay 80 million dong additionally.

Meanwhile, if the luxury tax also increases by 10-15 percent as suggested by state agencies, every car would be 50 million dong more expensive.

Just several days ago, when hearing about the reduction of the import tariffs on CBU (complete built unit) imports by 3-4 percent, and the reduction on some kinds of car part imports, people “exulted inwardly” because they hoped the lower tariffs would make cars cheaper.

Therefore, the information about the tax increases, which will lead to the price increases, has given many people a start. It is now clear that the car price decreases thanks to the car part tariff reductions would not be big enough to cover the increases in different kinds of tax and fees.

Auto dealers expect a good sale season

The domestic automobile market in October 2011 was really gloomy. The Vietnam Automobile Manufacturers’ Association VAMA has released a report showing that in October, the 17 member companies only sold 9258 cars, a decrease of 8 percent from September 2011.

If comparing with October 2010, the figure represents a sharp fall of 11 percent. The sale of multi-purpose vehicles decreased by 18 percent, while the sale of commercial vehicles by 31 percent, and only the cars with five seats and less saw the 17 percent growth rate.

The decrease in the car sale is really a surprise to many people, because the sale always increases towards the end of the year.

However, the gloomy market has heated up right when the information about the possible increases of different kinds of tax and fees coming out. Car dealers prove to be the happiest people these days, because this means that the sale would go well.

Auto sellers have begun raising the sale prices of some car models. Some Ford’s and Kia’s models, which once saw the actual sale prices lower than the manufacturer’s suggested retail price (MSRP) by 10 million dong, now do not offer price discounts any more.

Meanwhile, the car dealers of a showroom on Le Van Luong road told buyers that if they want cars immediately, they would have to pay higher.

Especially, the clients, who seek to buy Altis, Fortuner models of Toyota Vietnam, have been told to get deliveries in January 2012, because Toyota Vietnam now has to cut down production due to the flood in Thailand which has made the car part supply interrupted.

However, the problem is that clients all want to get deliveries by December 2011, because the ownership registration tax and car number plate fee would increase as of January 1, 2012.

Vietnamnet/ Tran Thuy

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