The car market is increasingly diverse, the price is reduced

2019 marks the year with the highest overall market sales in recent years. According to preliminary statistics of organizations such as the Vietnam Automobile Manufacturers as‌sociation (VAMA), the as‌sociation of car importers, joint ventures, private enterprises, the annual vehicle consumption is more than 440,000 units, while the previous year sales were about 300,000 units / year.

The growth in consumption was largely based on the supply of imported cars, the total number of imported cars in 2019 according to the General Department of Customs, the number of imported cars in Vietnam in 2019 increased by 84% over the same period last year. , the number of imported cars in Vietnam was 140,000 units, of which less than 9 seats were more than 102,400 units, accounting for more than 73%.

The volume of imported cars is much, the average price of imported cars is noticeably reduced, and especially the Vietnamese car market is 80% non-tax car of Thailand and Indonesia. This is a signal that countries in the region have made good use of the Vietnamese market to open up and eliminate taxes.

In terms of car prices, 2019 saw a decline in quite a number of types and segments of cars. From A segment cars to more advanced cars. The discount is from several hundred million dong, in some cases a discount of 20 to 30 million dong / unit.

According to VAMA statistics, the segment cars priced from 550 to 1.3 billion VND have the best sales in all segments. Sedans, MPVs and compact SUVs have the highest sales, while large SUVs and MPVs and luxury cars have reduced sales. Vios, Xpander, Hyundai Accent, Mazda 3, Kia Cerato, Honda City.

Policy changes, immediate impact on car prices

In 2018, the Vietnamese car market has many unpredictable fluctuations, in particular, Decree 116 has caused the decrease of imported cars "without braking". The group of domestic car manufacturers also struggled to meet new requirements to continue production. 2018 is also the first year Vietnam removed the import tax on cars with ASEAN countries, Thai and Indonesian vehicles increased galloping into Vietnam.

However, according to experts, policy makers, 2020 could be a year of major policy changes when the Ministry of Finance has submitted to the Government a decree to amend Decree 125 on car parts import tax to Vietnam. . The direction of the Decree will completely eliminate import tax rates to support domestic businesses.

According to the disclosure of the leader of the Tax Policy Department, the Ministry of Finance, it is likely that in the first 6 months of the year, the Government will consider approving the amended and effective Decree right away, supporting domestic enterprises to stabilize production.

Also in 2020, the Ministry of Industry and Trade and the Ministry of Transport are planning to submit the draft Decree to amend Decree 116 of the Government in the direction of abolishing type-lot type inspection, shifting to inspection according to imported cars, increasing importer responsibility and conduct post-inspection. This is a move that can help the number of imported cars to Vietnam increase faster in the future.

Also in 2020, it is likely that the Vietnamese parliament and the European parliament will officially ratify the new generation of bilateral free trade agreement (EVFTA) and the agreement on investment protection between the two countries.

Under the commitment, Vietnam will open nearly 90% to goods from EU countries through tariff elimination mechanism with a schedule of 5 to 10 years from the date of entry into force of the Agreement.

In particular, in the group of goods that eliminate tariffs, cars will have a roadmap for reducing import taxes in the first 9 years and begin to remove them after the 10th year after the Agreement comes into effect.

Thus, if EVFTA is officially approved to take effect in 2020, the tax reduction will apply right from this point and hopefully this will be the driving force to help the market price of cars decrease rapidly.