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Tax cuts to begin on ASEAN-made cars
The Ministry of Finance has informed the Vietnam Automobile Manufacturers Association that import tariffs on passenger cars imported from ASEAN member countries will be cut by 13 percent next year.
The cut, part of the Common Effective Preferential Tariff under the ASEAN Free Trade Agreement, will see tax on vehicles of up to nine seats go down to 70 percent.
Those imported from elsewhere will continue to attract an 83 percent rate.
Consumers will benefit while the local auto industry will have greater competition on their hands, according to the ministry.
It has suggested that the tariff on vehicles with more than nine seats should also be cut to the same extent.
Car sales are believed to be affected as buyers wait for the new tax rate to take effect.
Foreign auto firms like Mercedes Benz Vietnam, Ford Vietnam, and Toyota Vietnam are happy with the tax cut since they all have many manufacturing plants in the region. Buyers too are, of course, happy with the news.
But for Vietnamese car makers, it portends a tough scenario.
Since the tax will be cut by 10 percent every year until it reaches zero in 2018, the Vietnamese auto and parts industries should brace for fiercer competition since foreign carmakers will start importing by that time, Akito Tachinaba, VAMA’s Chairman, told Tuoi Tre.
Foreign carmakers are waiting to flood the Vietnamese market.
With Thailand being a regional auto hub for global auto companies, Thai carmakers are likely to be direct competitors for their Vietnamese rivals.
A US$500-million-plant set up US firm Ford Motors in Rayong Province churned out its first Fiesta last July.
Japan’s Honda makes seven vehicles of less than nine seats, including Jazz, City, Civic, Accord, CR-V, and Freed. Another Japanese carmaker, Nissan, makes its five-seat March.
Five others who have been licensed but are yet to start production are Toyota, Mitsubishi, Honda, Suzuki and India’s Tata motors.
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