A display at Vietnam AutoExpo 2018(Photo: VNA)
Hanoi (VNS/VNA) - The prices of imported automobiles in theVietnamese market may not reduce as much as expected after the Comprehensiveand Progressive Agreement for Trans-Pacific Partnership (CPTPP) came intoeffect on January 14, according to the Ministry of Industry and Trade.
Of 11 members of the CPTPP, which abolishes import tariffs on many products forits member countries, Vietnam imports cars from Japan and Canada.
As cars are categorised as a sensitive product, their import is still regulatedstrictly and must follow the set roadmap. Cars imported from Japan are mostlymade by Lexus and Subaru, and include some Toyota models such as the LandCruiser and Prado.
According to an official from the Ministry of Industry and Trade’s MultilateralTrade Policy Department who was quoted anonymously by vneconomy.vn, in additionto import taxes, vehicles are subject to a special consumption tax and otherfees.
“If the import tax is reduced but the special consumption tax and other feesare increased, automobile prices will not decrease as expected,” he said.
He said this was a matter of balancing infrastructure and the number ofvehicles, not a trade defence issue. The structure of automakers and importersalso has a big impact, meaning the import tax would be never the only factor indetermining car prices.
Under the CPTPP, Vietnam has pledged to reduce tariff barriers for cars fromJapan and Canada in the seventh year from the date the agreement was signed.Imported cars from these two countries, if they meet origin standards, will betaxed at zero percent following the annual reduction schedule.
The country will abolish import duties in the 13th year for new cars of alltypes. Cars with engine displacement capacity of 3,000cc or more will have atax cut schedule in the 10th year.
It will also apply tariff quotas on old cars with an initial volume of 66units. This volume will be gradually increased to 150 units from the 16th year.At the same time, the tax rate in quotas will drop to zero percent in the 16thyear, while the non-quota taxes will follow the import tax rate.
Vietnam imported more than 81,600 cars at a value of 1.8 billion USD in 2018,down 16.1 percent in volume and 19.8 percent in value compared with theprevious year, according to a report from the General Department of Customs.
The decrease was due to several barriers from the Government’s Decree 116,which stipulates the conditions for production, assembly, import and businessof automobile warranty and maintenance services, including requirements forVehicle Type Approval (VTA) certificates, road tests and inspections of everybatch of imported vehicles.
The volume of cars with nine seats or fewer was highest with over 53,980 units,worth more than 1 billion USD. This was followed by trucks with nearly 24,190units worth 501 million USD.
Thailand was the largest source of the imports with 55,360 units, earningnearly 1.1 billion USD. Indonesia was next with 17,150 cars worth 269 millionUSD.
Vietnam spent over 3.5 billion USD to import components and auto parts of allkinds.
According to the Vietnam Automobile Manufacturers’ Association, total sales ofthe Vietnamese market increased by 5.8 percent year-on-year in 2018 to 288,683units. On average, each day Vietnamese people bought about 790 cars.
Passenger car sales reached 196,949 units, up 27.7 percent. Commercial vehicleswere next at 84,598 units, down 19.2 percent. Finally, special-purpose vehiclessaw 7,136 units sold, a decrease of 48.5 percent.
Locally assembled cars had overwhelming had a majority of the market share,reaching 215,704 units, up 10.6 percent. Meanwhile, imported cars are onlyone-third of the total revenue of 73 trillion VND (3.14 billion USD), down 6.2 percentover the same period last year. - VNS/VNA
VNA
