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Import car market slumps due to trade deficit policy
A dark shadow hovers over the import car market as the Government tries to curb the trade deficit. The number of imported car has been decreasing and very few people visit car showrooms these days.
According to the General Department of Customs, in February 2010, only 2,500 cars were imported, a decrease of 26.3 percent from the previous month. Only 1600 cars with less than nine seats arrived, down by 400 from the previous month.
As such, the total cars imported to Vietnam in the first two months of 2010 is 5900 cars, just equal to half of the same period of 2009. Imports of less-than-nine-seat cars were also half that of the previous year.
In fact, the sharp fall of car imports has been expected. Some importers even say that 1600 cars for February was higher than anticipated and they predict that imports will decrease further in March. This means car showrooms will have even less visitors.
Chi Lan, a auto salesperson in Hanoi remarked that sales have dropped by 70 percent so far this month compared with 2009. She only sees a handful of visitors each day, and no buyers. Since her income depends on the number of cars sold, her salary has decreased sharply.
There are many reasons for the sharp fall in imports, including the removal of the preferential VAT policy, the removal of the ownership registration tax and the higher taxable value defined by customs agencies. Commercial banks have also been tightening credit and refuse to provide consumer loans, leaving people with no money to purchase luxury items.
Car dealers revealed that the minimum taxable value of cars defined by customs agency is 2-20 percent higher than that applied in 2009, adding up to $1,000-2,000 per car. With VAT and ownership registration tax returning to 10 percent, buyers must pay some tens of millions of dong more for a medium-class car. As for luxury autos, the figure could be as high as one hundred million dong.
Tuan, a private company director, once planned to buy a Kia Morning for his wife. Now he must reconsider the purchase, because the price has increased by $600.
Pham Quang Huy, Director of Dai Loc Car Salon, understands why the demand is low. People already purchased cars before Tet, when they could enjoy tax preferences. Afterwards, the demand for cars has dropped quickly. He reports that sales at Dai Loc have dropped by 65-70 percent, especially sale of imported Camrys.
Pham Thi Thanh Hang, Deputy Director of Toan Cau Car Company, noted that cars worth $50,000 and higher like Venza are selling very slowly, while sales of medium-priced models such as Spark, Gentra and Lacetti is better.
Meanwhile, information about Toyota accelerator problems has also been cited as a reason for slow sales of imported cars.
VietNamNet, DTCK
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