Will low-cost cars flood the Vietnamese market?

The tariff cuts applied to imports from ASEAN and the luxury tax based on cylinder capacity are expected to encourage the import of more low-cost models.



According to GDC, the imports of CBU cars decreased sharply in January 2017. Only 7,338 cars arrived in the month, a decrease of 52.5 percent compared with December 2016.

However, the decrease does not mean the lower demand for import products.

Analysts attributed the decrease to the long 2017 Tet holiday which fell in January.

The same thing occurred with January 2016, when only 5,855 cars were imported, a sharp fall of 60 percent compared with December 2015, according to Buu Dien.

Analysts believe that more imports will come in the next months, and that imports will overwhelm the domestic market.

Automobile manufacturers have stopped making some models in Vietnam and import the products from ASEAN countries instead. Honda Civic and Toyota Fortune are two typical examples.

Analysts have also found that the value of CBU imports, especially 9-seaters and smaller cars, is on the decrease.

A report showed that the import value in January 2017 was $153 million, down by 35 percent.

While the number of cars imported in January 2017 was higher by 1,000 products than in January 2016, the import turnover was lower by $20 million ($175 million vs $153 million).

Analysts said this was foreseeable. In fact, the tendency began in the second half of 2016 as the domestic market was affected by changes in tax policies.

The luxury tax, taking effect on July 1, 2016, has had a big impact on the retail prices of import models. As a result of the new taxation method, some small-size models have seen the prices decrease, while some large-size models with high cylinder capacity have seen prices soar.

Since the beginning of the year, the prices of imports have changed once more as the import tariffs on ASEAN-sourced imports were cut. As a result, CBU imports from Thailand with reasonable prices have been flocking to Vietnam.

Reports showed that the CBU imports from Thailand accounted for 80 percent of total CBU imports to Vietnam in January. Around 2,600 cars were imported form the market, worth $51.7 million.

Vietnam has also imported low-cost products from India with 1,006 cars arriving in January, worth $3.73 million.

Dat Viet reported that car dealers have unanimously slashed the selling prices of imports from Thailand and Indonesia.

Toyota Vietnam has announced the new price levels to be applied for small-size models – Yaris G and Yaris E, commencing from February. The new price is VND642 million for Yaris G, down by VND47 million, while Yaris E VND592 million, down by VND44 million.

Tran Thuy / vietnamnet