VietNamNet Bridge - Eight private and state owned automobile and mechanical firms have decided to combine to protect domestic production before the tariff reduction commitments that go into effect in 2015.

Dao Phan Long, Vice President and Secretary General of the Vietnam Association of Mechanical Enterprises (VAMI), said eight businesses including Veam, Vinamotor, Samco, Truong Hai Auto, Vinaxuki, Z179, the Defense Industry General Department and MDC center, have agreed to establish the "Automobile Department" under VAMI.

According to Long, with this decision, for the first time, automobile and mechanical engineering firms in the country will come together to assess the capacity to plan future development of the industries.

The automobile assembling firms will focus on their strengths. Meanwhile, the production of spare parts and equipment, if they cannot assume the work, will be transferred to the mechanical engineering enterprises.

"This is the way for automobile manufacturing enterprises to protect the domestic market before the commitment on tariff reductions that will be applied in 2015," said Mr. Long.

After nearly 20 years, the automobile market in Vietnam is still small compared to demand. The localization rate of cars has reached 40 percent.

The Finance Ministry issued an order last week amending the vehicle import tariff in keeping with Viet Nam's commitment to the World Trade Organisation (WTO).

Under the order, the duty on passenger cars will be cut from 67 to 64 per cent. This category includes station wagons, sport cars and motor homes as well as cars with less than 10 seats and an engine capacity of less than 2.5 litres.

Meanwhile, the duty on four-wheel-drive (4WD) vehicles will be reduced from 70 to 59 per cent, while the import tariff on trucks with a loading capacity of less than five tonnes will be reduced from 59 to 56 per cent. The tariff on motorcycles, sidecars and mopeds will be reduced from 47 to 40 per cent.

The value of imported cars in the first 11 months reached $1.23 billion, a 100.7 per cent year-on-year increase, according to the General Statistics Office (GSO).

Minh Ha