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Automatic licencing scheme to be applied to control car imports
The government will allow the Ministry of Industry and Trade (MOIT) to apply an automatic licencing scheme on car imports to limit car imports and control the trade deficit.
With the automatic licencing scheme, MOIT can stop licencing if necessary to restrain car imports, if other measures do not bring the desired effects.
Currently, the regulation on forcing car importers to pay tax before the imports get customs clearance has helped greatly in reducing imports. MOIT believes that the regulation, together with the import licencing scheme, will leave no other way for more cars to arrive in Vietnam.
According to the General Department of Customs, after three months of applying ‘urgent measures’ to reduce the trade deficit (raising import tax, controlling customs clearance), the number of cars imported in June decreased by a half over the previous month. The high import tax rate, now at 83%, the regulation on paying tax before customs clearance and banks’ tightened credit have led experts to believe that there will be only several hundred cars imported in July.
Car prices are now in a downturn in the context of the quiet market. The members of the Vietnam Automobile Manufacturers’ Association (VAMA) have also reported sharp decreases in sales in June. The decreases in the sales of commercial and multipurpose vehicles made the car market fall by 15% in June compared to May, and the number of sold units fall to below 10,000.
While the higher tax has partially helped keep cars away from Vietnam, luxury models, worth several hundred thousand dollars, are still arriving.
On July 2, a Mercedes S63 AMG and BMW X6 worth more than VND9bil arrived in Noi Bai airport.
According to the General Statistics Office, by the end of June 2008, the total import turnover of cars and car parts had exceeded $1.3bil.
A lot of high-end cars are rolling on Vietnam’s streets. Vietnam now has 15 Rolls-Royce Phantoms, more than 20 Bentleys. A car importer said that a well-known real estate businessman has ordered three BMW X6.
Porsche, BMW, Audi and Rolls Royce are trying to open showrooms and seek distributors in Vietnam as they consider Vietnam a newly emerging market for luxury cars.
In 2007, five Phantoms were imported to Vietnam, while no Phantom was imported to Thailand, and only two to the Philippines.
Analysts believe that more luxury cars, used ones, but relatively new, will arrive in Vietnam in the time to come as the tax rates on used imports are now much lower than the rates on brand new imports. The fixed tax rates on used 3.0-4.0L cars are now $20,000, on 4.0-5.0L $26,400, and on 5.0L and higher $30,000 – much lower than the 83% on brand new imports.
A brand new 6.7L Rolls Royce Phantom, manufactured in the UK in 2008, now has the sale price of $350,000/unit. With the current tax rate of 83%, an importer would have to pay the tax of $300,000. However, a used car of the same model would bear the fixed tax of $30,000 only.
Euro Auto, the importer and distributor of BMW in Vietnam, has launched the BMW X6 3.5 onto the market, targeting rich clients. The BMW X6 has the sale price of Euro126,800/unit. Euro Auto said that six clients have ordered BMW X6.
VNN
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