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Re-exporting cars due to lacking money
At least 60 luxury cars imported by Tradoco have been returned to the exporting countries in the last three weeks. Having no money to pay the taxes, Tradoco has been paying 10% fines for violating contracts and giving back the imports to partners.
The fact that banks are tightening credit and a regulation has been enacted that forces importers to pay tax right at the ports prior to clearance have both pushed car importers to the wall.
Tradoco, one of the biggest car importers, stopped signing new contracts in early May. The cars that clients have ordered are still arriving as scheduled, while other imports are being re-exported. The company will pay fines and other expenses to re-export the imports, since the market has become so gloomy that the imports are unsalable.
“The import car market has never been as gloomy as nowadays,” General Director of Tradoco Pham Huu Tam said.
He added that for every car re-exported, Tradoco loses $1,000-3,000, not including transport and storage fees.
The owner of a big automobile salon in HCM City said that the re-export of cars is not strange. The import car market has been frozen for the last one month with sales very slow. The purchasing power remains very low despite the price decreases of 15-20%.
He said that June is when importers have to pay bank debts. Therefore, most companies accept selling cars at a loss to get money for debt payment.
According to him, the biggest problem importers are facing is lack of capital. The regulation that importers have to pay taxes right at the moment they clear imports has ‘weeded out’ small companies from the game, because they do not have capital to import more cars. Meanwhile, bigger companies only import cars when they have orders from clients.
Previously, importers could make customs declarations 15 days in advance and pay tax within 15 days after the imports were cleared. The period of 30 days allowed importers to sell the imports and get money for subsequent imports.
The director of a Hanoi-based car import company said that importers have to pay $142,000 in tax for a Mercedes S550 (VND2.3bil), and $105,000 for a Mercedes GL550 (VND1.7bil). A Lexus would be taxed $105-106,000, which means that importers would have to pay $1mil for a consignment of 10 imported cars.
“The sums of money prove to be too big in the current conditions, when banks are tightening credit,” he said.
The locally-made car market has also become quiet with the sales of the 16 members of the Vietnam Association of Automobile Manufacturers (VAMA) down sharply in May.
Experts say that the car market will remain quiet until the end of October. Customs agencies have also confirmed sharp reductions in car imports, saying that the imports may decrease by ¾ in June compared to previous months.
VNN
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