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Auto market gloomy amid information about ownership registration tax increase
The automobile market remains lackluster despite the information that the ownership registration tax would increase by 10-20 percent.
Both imports and domestic cars unsalable
Car dealers once hoped that the sale would increase sharply on the days before October 15, when the Ministry of Finance’s decision on increasing the ownership registration tax by 10-20 percent took effect, because if buying cars prior to that day, people would save a big sum of money for tax.
However, the thing what once happened in April 2009, when people rushed to buy cars to avoid the luxury tax increase, did not repeat. The information about the higher tax applied on the cars with less than 10 seats could not help make the market heat up.
Lao dong has reported that the demand for car did not increase, both for domestically assemble products and imports.
Shiny new cars were seen lying dormant at showrooms in Hanoi, which only received several visitors a day. A salesman of a Toyota’s showroom on Giai Phong road in Hanoi said that some people drop in, ask about the prices and leave. He has affirmed that the demand remains very weak, since people tend to fasten their belt in the context of high inflation.
The report by the Vietnam Automobile Manufacturers’ Association VAMA said that VAMA”s members sold 10,031 cars in September, an increase of 10 percent over the same period of 2010, especially, the sale of cars increased by 51 percent. However, the sale of cars in Septembers, 4145 cars, represented the one percent decrease in comparison with August.
When asked about the sales fall in September in comparison with August, when the day the new policy on ownership registration tax was near, Nguyen Trung Hieu from VAMA said that it has been unclear about the tax increase until the Hanoi People’s Council makes final decision. However, it was very likely that the new ownership registration tax would not take effect right from October 15.
Hieu also said that the sale much depends on wholesale contracts (Automobile manufacturers sell cars to big consumers, including taxi firms), adding that just a contract on selling hundreds of cars would significantly affect the cars sales of the months.
The slow sale has been occurring not only with domestically assembled cars, but also with imports. Car dealers have been put on tenterhooks, since the cars imported several months ago still have not been sold, while they need to sell cars as soon as possible to get money to pay bank debts.
Hoang Cuong from Phu Dat Company, which specializes in importing and distributing luxury cars, said that since the Circular No 20 by the Ministry of Industry and Trade, which imposes stricter import procedures, took effect in August, luxury cars such as BMW and Mercedes have become 10-15 percent more expensive, which has made car sale go very slowly.
The price of a used BMW 740, which remains almost new, for example, has increased to 200,000 dollars from 170,000 dollars. The sharp price increases have prompted people to buy the used cars which have been registered at the Vietnam Register, instead of buying brand new cars or second-hand unregistered cars.
Manufacturers, people keep listening for news
Nguyen Ngoc Anh, representative of the Hoa Binh auto salon chain, was very busy answering calls. Anh said that people called to sell cars, not to purchase cars.
He said that at the same period of the previous years, Hoa Binh could sell ten of cars every day. However, he now would be satisfactory if 1-2 cars are sold a day. The economic difficulties, the tightened monetary policies all have led to the sharp fall of the car demand.
“80-90 percent of people have to borrow money to buy cars. Meanwhile, banks have restricted the lending. Therefore, the car market has become frozen,” Anh said.
Analysts believe that the new ownership registration tax policy would affect the demand in the last months of the year. Especially, the taste of customers would also change: they would prefer registered cars instead of brand new ones.
vietnamnet, Lao dong
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