The Vietnam Automobile Manufacturers Association (VAMA) has proposed a 5 per cent automobile registration fee applied nationwide.
The proposal came out in the face of rising numbers of unsold stocks of local automobile assemblers amid the 20 per cent and 15 per cent registration fees recently applied in Hanoi and Ho Chi Minh City.
According to VAMA, the collection of a universal fee rate countrywide will help prevent local tax agencies from being overloaded with new car owners, as they will try to attract as many as car owners as possible.
VAMA has just sent a petition to the National Assembly office and relevant state agencies for the adjustment of policies related to the auto industry.
In particular, the petition seeks the government’s approval on the imposition and recommendation for no new automobile fees in the coming decade, according to Pham Duy Hung, secretary of VAMA.
The petition is aimed at the cancellation of the annual fee set to limit personal vehicles recently proposed by the Ministry of Transport and the postponed road-use fee.
It will help lighten the load of transport fees for both businesses and consumers, VAMA said.
According to the VAMA, in Q1/2012, Vietnams automobile market decreased by 41 per cent over the same period last year, or some 21,331 vehicles.
If the average price per car is VND500 million, the tax revenue loss from the state budget may be about VND6 trillion ($290 million) in first four months of 2012, compared to same period of 2011, said VAMA.
Besides, VAMA is very concerned about the collapse of the domestic automotive industry in the country.
It is for this reason that the association has made many proposals on the reduction, cancellation and delay of the collection of fees for certain types of automobiles.
According to VAMA, many car manufacturers are implementing measures to cut production because their inventories are too high.
Recently, some members representing VAMA said they have to operate under capacity, and even suspend production.
“Extremely high inventories are forcing most manufacturers and assemblers to take strong measures to reduce their production,” Hung told Dau Tu newspaper.
“Dealer networks are facing cash issues and high inventories in particular.”
Vietnam Economic Forum has also reported that many firms including GM and Ford Vietnam now have inventories amounting to thousands of vehicles as a result of unsalable cars, and this, together with capital shortages and high interest rates, was causing them utmost difficulties.
Though many enterprises and joint venture automobile firms have continually made solutions, including promotions, to stimulate demand and attract customers, every effort is unlikely to revive the market.
Consumers have never witnessed so many automobile sale promotion campaigns as there are these days, with sharp price reductions of VND30-100 million per car, according to newswire Vietnamnet.
In early April 2012, Honda Vietnam announced the decision to “give presents” of VND40-55 million to Honda Civic sedan buyers in April and the first half of May.
GM Vietnam last month launched an impressive sale promotion campaign, offering free maintenance, periodic inspection, repair and part replacement to the buyers of three new models – Orlando, Captiva and Spark for two years starting April 10, 2012.
Additionally, GM Vietnam props up 100 per cent of the insurance premium for material damages within the first two years, and partially props up the ownership registration tax.
Ford Vietnam in April also decided to offer price discounts for some models available on the market for a definite period with the sharpest price discount of VND86 million per car.
Vietnamese automobile manufacturer Truong Hai has also continued stimulating the demand for the MPV KIA Sorento, assembled domestically, by offering benefits worth VND100 million.
VinaMazda has also announced the impressive sale promotion campaign, offering price discounts of VND35-80 million each.
Car importers also have to slash the sale prices. The luxurious sedan Pluence model, which has the manufacturer’s suggested retail price at VND1.05 billion, now can be bought at VND920 million.
Car sale promotion campaigns nowadays do not catch the special attention from the public like they did in the past.
Too many promotion campaigns have been run since the beginning of the year, since demand has fallen dramatically due to high inflation and new cars.
Gloomy picture: past, and ahead
Total car sales dropped sharply last month, beating industry expectations about imminent market recovery following satisfactory results in March, according to Dau Tu newspaper.
April sales reached nearly 7,000 units, declining 24 per cent over March and 46 per cent over the same period last year, reported the Vietnam Automobile Manufacturers’ Association (VAMA).
Of the number, 2,394 passenger cars and 4,588 trucks were sold, down 26 and 22 per cent, respectively, compared to March’s levels.
The sales of completely knocked down (CKD) sales reached 5,504 units, down 24 per cent month-on-month, while the sales of completely built units (CBU) tumbled 23 per cent.
Eighteen VAMA members alone last month sold over 6,000 vehicles, declining 20 per cent over the previous month and 37 per cent over the year.
Almost all carmakers, including Truong Hai, Toyota, Mercedes-Benz, Honda, GM, Ford, Mitshubishi, Isuzu and VMC, witnessed the downtrend.
Many were seeing their sales slashed by half and some by even more than two-thirds from the figures of the same period last year.
The report by VAMA showed that 17,981 cars were sold in the first quarter of 2012, a sharp decrease of 37 per cent in comparison with the same period of the last year.
VAMA members have expected this year’s total sales to reach only about 100,000 units, a decrease of 27.5 per cent over last year. At a VAMA meeting earlier this year, its members predicted total car sales to range between 130,000 and 140,000 vehicles in 2012.