Vietnam's auto market can regain growth momentum thanks to new policies.

The Ministry of Finance has proposed that the Government reduce the registration fee by 50% for domestically assembled cars for a period of six months, commencing from November 15, 2020.

According to the Vietnamese Automobile Manufacturers’ Association (VAMA), since the fourth outbreak of the Covid-19 epidemic, many factories of its members had to suspend operation for a time. After social distancing, some manufacturers resumed business but they face another problem: a large inventory of cars.

VAMA estimates that more than 200 car dealers of its members are still closed, and more than 200 auto service workshops cannot operate. Supply chains and distribution activities have stalled and been severely affected. Many companies have recorded sales declines of over 60%.

Vietnam's auto market has been declining for consecutive months. August sales recorded the lowest number in the past five years, with less than 9,000 cars sold throughout the country.

Slashing the registration fee reduces the total cost for cars. The policy will benefit consumers and stimulate demand for cars.

Some auto dealers said that the Ministry of Finance’s proposal has caught public attention and will have a significant impact on the customer’s decision to buy a car. Many people say they will wait until this policy takes effect to buy a car while some say they will buy a car now but not register their cars until the new policy comes into force.

In fact, this policy has a positive impact on the Vietnamese automobile market last year. Data from VAMA shows that in the last six months of 2020, the output of domestically manufactured and assembled cars increased steadily over the months. In November and December 2020, the number of domestically manufactured and assembled cars sold increased sharply, with 14.7% and 25% compared to the previous month.

This policy also significantly assisted car manufacturers and distributors to sell vehicles in inventory since the outbreak of the Covid-19 epidemic, as well as to resume supply chains and increase production.

The Ministry of Finance assessed: “Along with the implementation of other policies to support the automobile industry, the 50% reduction in registration fee has created a driving force to promote the development of the local automobile manufacturing and assembling industry, thereby contributing to creating jobs, increasing incomes for workers, ensuring social security, and making a spillover effect to other economic sectors.”

Hoang Nam

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