Car prices escalating on higher luxury tax

Two automobile manufacturers, Toyota Vietnam and Ford Vietnam, have announced the new manufacturers’ suggested retail prices (MSRP) for their models, which are higher than the old prices due to the higher luxury tax taking effect as of today, April 1.

Toyota Vietnam has announced the price increases of between 0.2%-21.2% for its models. The lowest price increase has announced for Camry 2.4G sedan, with which the price has been raised from US $49,700 a vehicle to US $49,800 a vehicle. Meanwhile, the highest price increase is applied to the 2008 Land Cruiser, imported under the mode of complete built unit (CBU). The model now has the price of US $125,000 instead of US $103,100.

Meanwhile, other models have seen the price increases of over 10% on average.

As for Ford Vietnam, only two models have seen the prices increase, including the Everest and Transit Van, while the prices of other models remain unchanged.

4x4 MT, 4x2 MT and 4x2 AT versions of the Everest model have seen the price increases of US $5,900, US $4,700 and US $5,300, respectively. Meanwhile, the increase of US $2,000 has been announced for the Transit Van.

In general, the models of 6-9 seats, the models with less than five seats, and the cylinder capacity of over 3,000 cubic metres are the main subjects for the price increases as the result of the higher tax rates. Meanwhile, other models have seen the prices decrease, also because of the impacts of the luxury tax adjustments.

Toyota Vietnam has two models which have seen prices decrease, the Corolla Altis and Vios, down by 1.9% and 2.5%, respectively. Ford Vietnam has one model which has seen prices decrease, the Focus 1.8MT, down by US $3,700.

As such, the effective luxury tax law has triggered a new price increase in Vietnam’s automobile market. With a higher tax rate leading to higher sale prices, the market is forecast to continue witnessing the slow sales in the time to come, especially for vehicles with 6-9 seats.

The new prices announced by Toyota Vietnam and Ford Vietnam showed that the two manufacturers have been gentle with the price adjustment decisions. The price increases set by the manufacturers prove to be lower than the expected impacts to be brought about by the luxury tax adjustments.

For example, the Fortuner model’s price should be raised by 15% to come in accordance with the tax increase, while Toyota has raised the price by only 11.7%.

In fact, market observers said that automobile manufacturers cannot raise the sale prices more sharply, as they well understand that the market remains gloomy and they should not cause shock to consumers until the national economy and the market recover.

The observers said that vehicles with less than five seats and with the cylinder capacity of 2,000 cubic metres lower will catch more attention from customers as their prices have decreased, though the decreases prove to be modest.

>   Agriculture sector key to economic revival, prime minister says   (01/04/2009)

>   An Giang vegetable exports to Cambodia thrive (01/04/2009)

>   AirAsia has no plan for direct Vietnam-Singapore route (01/04/2009)

>   Vietnam to help Mozambique develop agriculture (01/04/2009)

>   Fishery sector needs overall development strategy (01/04/2009)

>   EU inspectors to check local seafood (01/04/2009)

>   ADB forecasts 4.5% growth for Vietnam (01/04/2009)

>   High-tech products sales still high (01/04/2009)

>   Low-cost houses must not mean low quality (01/04/2009)

>   Egyptian press runs positive news about basa catfish (01/04/2009)