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Super cars still arriving despite measures
Despite efforts by the government to tighten luxury imports to fight inflation, cars worth several hundred thousand dollars are still arriving in Vietnam.
On July 2, a Mercedes S63 AMG and a BMW X6 worth more than VND9bil, which were carried by air, arrived at Noi Bai airport.
Just in the first half of 2008, the total import turnover of CBU cars (complete built units) and car parts reached more than $1.3bil, one of 10 items with import turnover of over $1bil.
V., the owner of a car salon in Tan Binh district in HCM City, specialising in importing luxury cars from the US, related that he sold 20 units in the first quarter of 2008, but 34 units in April, mostly luxury ones priced $100,000.
According to the HCM City Customs Agency, by the end of March, 2,593 cars had arrived in HCM City, an increase of 2,171 units over the same period of 2007. At that time, freight and forwarding companies said that luxury cars ‘flew’ to HCM City every week. A Boeing 747-400 carried four cars to Vietnam which had the value of not less than $100,000/unit.
The low import tax at that time paved the way for a lot of cars to arrive in Vietnam. Analysts said that some models appeared in Vietnam just several weeks after they were introduced in foreign markets. Just within a short period, all luxury car brand names appeared in Vietnam like Rolls Royce (13 units), BMW X6, which appeared in the world’s market in late April and appeared in Vietnam in early July (7 units), and Bentley (20-30 units).
The owner of an automobile salon on Cong Hoa street in Tan Binh district related that he is still selling several luxury cars a month, even with the import tax being lifted to 83%. A client purchased three luxury cars worth over $300,000 and made payment in cash.
The high demand for luxury cars in Vietnam has prompted luxury car manufacturers like Porsche, BMW, Audi, Rolls-Royce to race to look for distributors and authorised dealers in Vietnam who will help boost sales in the country, where the income per capita is less than $1,000 per annum.
Experts say that if the import tax rate had not been raised to 83%, even more luxury cars would be arriving in Vietnam.
However, analysts say that luxury cars are still arriving due to shortcomings in tax policies. Within four weeks in late May and early June, four used Rolls-Royce Phantoms docked at Vietnamese ports. As these were used cars, they were assessed tax of VND$30,000 only. Similarly, in April 2008, a Lamborghini Murcielago LP640 manufactured in 2007, which had the price of $360,000 in the US, was assigned $30,000 (VND500mil) in tax only.
If noting that a brand new Rolls-Royce Phantom a Vietnamese businesswoman imported directly from the British manufacturer in 2008 was imposed VND13bil in tax, one would see that the tax of $30,000 or VND500mil on used luxury cars proves to be too low.
According to the General Department of Customs, some 10,000 used cars have arrived in Vietnam in the last two years, since Vietnam allowed used imports. Luxury cars have accounted for nearly 50% of the imports.
Analysts have urged the government to further increase taxes in order to reduce the trade deficit, otherwise, foreign currencies will continue flowing out of Vietnam while the national economy needs more foreign currencies.
VNN
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