The instruction was given during a recent meeting in Hanoi to discuss policy to draw up a strategy and plans for the Vietnamese automobile industry.

Currently, three kinds of taxes are levied on cars smaller than nine-seaters: a 45 percent tax rate for cars with engine displacement of less than 2.0 litres; 50 percent for cars having displacement of between 2.0 and 3.0 litres; and 60 percent for cars with a displacement of more than 3.0 litres.

According to the PM’s instruction, vehicles with smaller cylinders will enjoy lower special consumption tax and those with larger cylinders will be subject to higher tax.

The country’s strategic plan aims to develop the Vietnamese automobile industry by 2025, and its vision for the period up to 2035 was approved by the government last year.

The plan will focus on manufacturing small-sized nine-seater cars with economical engines.

It has also set a target of manufacturing about 1.5 million cars in 2035, of which nine-seater cars will comprise 852,600 units, 10-seaters and bigger will comprise 84,400 units, trucks will make up 587,900 units and MPV will account for 6,500 units.

In addition, locally-produced automobiles will account for 78 percent of the domestic demand. The plan envisages export of 90,000 units in 2035.