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Auto traders face difficulties
Consumers are turning away from imported and locally made cars despite a sharp drop in prices triggered by the government’s decision to cut VAT to five percent for all automobiles, which came into force on February 1.
Aside from the VAT cut, automobile dealerships have launched sales promotions offering large discounts but to no avail.
In early February, Vietnam Toyota cut the price of 15 models of cars by five percent. At present, a Vios Limo is sold at $ 1,100 lower than its trade price, a Camry 3.5 Q $3.100 and a Land Cruiser $4,900.
Euro- Auto, importer and distributor of BMW automobiles, has reduced its prices $3,000 for a 320i Business, $3,600 for a 320i Professional, $7,000 for a Z4 and $9,000 for an M3.
Vietnam Mercedes-Benz is offering price cuts, too. Buyers can enjoy cuts of $2,000 to 10,000, depending the model.
Other automobile companies, including Vietnam Ford, Vietnam Honda and Vidamco Joint- Venture are also offering reductions from $1,200 to 3,000.
Automobile traders blamed poor consumer demand for the high rate of import duties on cars and the ongoing economic crisis, which has caused an adverse effect on demand.
Tran Hoang, director of Tran Hoang Auto Saloon, in An Duong Vuong Street, District 5, said, “In the same period last year, my saloon could sell between two and three cars a week, but it’s really hard to find customers now. If the situation doesn’t improve, I guess that many saloons will have no choice but to close down soon.”
Auto traders, however, still have to wait for further challenges ahead as the Ministry of Industry and Trade has submitted a proposal to apply an increase of 70 percent for a special consumption tax on cars having less than nine seats in early April.
At present, apart from 83 percent import duty, automobiles of all kinds may have to incur special consumption tax rates of between 30 percent and 50, depending on the model.
Many local auto traders said that they do not know how they will manage if the new tax policy is approved by the government, pointing out that they are now facing the much pressure from competition with huge foreign auto manufacturers and distributors, like Nissan, that have been allowed to conduct business since the country’s WTO commitments on January 1.
Local auto traders said that to survive they are trying their best to sell dozens of thousands of cars they imported a couple of years ago, but it is really difficult for them to do so, taking the adverse effect of the current global crisis into account, and at the same time outlining new strategic plans to deal with foreign competitors in the long run.
VietNamNet/SGGP
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