When will cars in Vietnam be cheaper?

The high production costs, taxes and fees all make automobile prices in Vietnam much higher than in other countries in the region.

At the government’s November regular press conference, the local press raised questions about the tax and fee policies, saying that automobile manufacturers complain about current policies put difficulties for them to compete with imports and increase the localization ratio.

When will cars in Vietnam be cheaper?



Deputy Minister of Industry and Trade Do Thang Hai said the car prices in Vietnam are higher than inother countries because the domestic production cost is higher. The high taxes and fees also push the prices up.

For domestic automobile manufacturers and assemblers, the production cost is high because of the small scale of the domestic market. Moreover, the automobile industry has to compete with other rivals in the region and the world, such as China, Japan, South Korea, India and ASEAN countries.

Another reason cited by Hai is that Vietnam still doesn’t have many manufacturers of the region’s and the world’s stature. As foreign invested enterprises tend to use car parts made by enterprises from the same countries, there is a lack in the connection between foreign invested and Vietnamese enterprises.

Vietnam also lacks major materials, such as plastics and rubber, to manufacture cars. It has to import materials. This makes the production cost higher.

Deputy Minister of Industry and Trade Do Thang Hai said the car prices in Vietnam are higher than inother countries because the domestic production cost is higher. The high taxes and fees also push the prices up.

VinFast, a 100 percent Vietnamese owned automobile manufacturer, days ago announced the automobile price structure. A VinFast Lux A2.0 standard version has the cost price of VND980.6 million, including VND640 million worth of materials, VND59.2 million worth of shipping fee and import tax, VND54 million worth of manufacturing cost, VND5.9 million worth of warranty cost, and VND24.6 million worth of production management cost. The remaining is the storage fee, domestic transportation fee, and sale and business management cost.

 


The car bears the tax of VND460 million, including 40 percent of luxury tax and 10 percent of VAT, which is equal to 50 percent of the production cost of the car. As such, the final price of the car would be VND1.392 billion, not including amortization fee, financial and investment costs, and profit for manufacturers.

At present, the manufacturer sells the car at VND1.099 billion, which means that it incurs a loss of VND300 million for every car sold.

An analyst said a personal car bears three major kinds of taxes, including import tax, luxury tax and VAT. These taxes overlap. Therefore, the selling prices are very high.

Hai said the Government will protect and develop the domestic automobile industry with technical barriers which come in line with international commitments.

Under the current Decree 125, manufacturers enjoy a zero percent tariff for five years for car parts which cannot be made domestically.

Mai Lan 

Cheap Thai cars land in Vietnam, Chinese imports stop suddenly

Cheap Thai cars land in Vietnam, Chinese imports stop suddenly

Cars from Thailand led the market in the first 10 months of 2019, while fewer Chinese products have been imported because of the controversy about China's map with nine dash line.

Vinfast subsidizes VND300 million for every car sold

Vinfast subsidizes VND300 million for every car sold

VinFast, the automobile manufacturer belonging to Vingroup, said it is selling cars at a loss.

 
 

Other News

.
Commercial centres deserted in Hanoi amidst COVID-19 fears
Commercial centres deserted in Hanoi amidst COVID-19 fears
PHOTOSicon  22/03/2020 

With fears surrounding the potential spread of COVID-19 gripping Hanoi, the majority of commercial centres located in the capital have been increasingly quiet in recent days with local people cautious about going outside.

VN shrimp segment above water
VN shrimp segment above water
FEATUREicon  22/03/2020 

Despite the complexities of COVID-19, shrimp exporters and processors still see a bright future ahead thanks to new markets, and boosting exports to traditional markets which have cut imports from China.

Vietnam makes it into top 5 economic freedom gainers in Asia-Pacific region
Vietnam makes it into top 5 economic freedom gainers in Asia-Pacific region
BUSINESSicon  22/03/2020 

With the strides in opening its economy, Vietnam has improved its ranking to 105th on the 2020 Index of Economic Freedom by The Heritage Foundation.

Firms to adhere to anti-dumping law
Firms to adhere to anti-dumping law
BUSINESSicon  22/03/2020 

Pham Duy Khuong, managing director of ASL Law, talked about some important contents related to anti-dumping laws that foreign companies should pay attention to when digging into the Vietnamese market.

VN firms resolute in business goals despite COVID-19 impacts
VN firms resolute in business goals despite COVID-19 impacts
BUSINESSicon  22/03/2020 

Many companies have performed well in the first two months of the year despite the COVID-19 outbreak and insist on keeping business targets unchanged.

VN rail sector finding way back on track
VN rail sector finding way back on track
BUSINESSicon  22/03/2020 

Despite strong efforts, state-owned Vietnam Railways may face a downturn this year due to the COVID-19 pandemic and challenges from legal barriers. 

State capital commission to work with struggling mega-projects
State capital commission to work with struggling mega-projects
BUSINESSicon  21/03/2020 

The Commission for the Management of State Capital at Enterprises (CMSC) must continue to support managers of 12 struggling mega-projects under the Ministry of Trade and Industry with the State’s capital investment.

Real estate firms calls for Government support
Real estate firms calls for Government support
BUSINESSicon  21/03/2020 

The HCMC Real Estate Association has urged the Government to add the property industry to the list of those affected by the COVID-19 outbreak and are eligible for a five-month postponement of VAT and land-use fee payments.

EU, US yet to limit garment imports from Vietnam due to COVID-19
EU, US yet to limit garment imports from Vietnam due to COVID-19
BUSINESSicon  22/03/2020 

Minister of Industry and Trade Tran Tuan Anh said on March 20 that EU and US authorities have yet to limit the import of garment products from Vietnam.

Textile and footwear firms go local to survive pandemic
Textile and footwear firms go local to survive pandemic
BUSINESSicon  21/03/2020 

While most textile and footwear enterprises in Vietnam struggled to find alternative sources of raw materials to maintain production, some with local sources have survived during the COVID-19 pandemic.

US has no plan to suspend import of Vietnamese garment-textiles: ambassador
US has no plan to suspend import of Vietnamese garment-textiles: ambassador
BUSINESSicon  21/03/2020 

The US Government has no plan to suspend the import of Vietnamese garments-textiles, said Vietnamese Ambassador to the US Ha Kim Ngoc.

Covid-19 crisis can offer opportunity for Vietnam to expand role in global supply chain
Covid-19 crisis can offer opportunity for Vietnam to expand role in global supply chain
BUSINESSicon  22/03/2020 

The difficulties in the global pandemic are opportunities for Vietnam to expand its role in the global supply chain.

Vietnam’s fish, shrimp exports no longer can enjoy preferences from the US
Vietnam’s fish, shrimp exports no longer can enjoy preferences from the US
BUSINESSicon  23/03/2020 

Vietnam’s seafood industry has received bad news: it can no longer enjoy the preferences offered by the US to developing countries.

BUSINESS NEWS HEADLINES MARCH 21
BUSINESS NEWS HEADLINES MARCH 21
BUSINESSicon  21/03/2020 

State Bank approves restructuring plan for Saigon Commercial Bank

BUSINESS NEWS HEADLINES MARCH 20
BUSINESS NEWS HEADLINES MARCH 20
BUSINESSicon  20/03/2020 

Garment export value hits US$5.3 billion during Jan-Feb

EVFTA expected to create great pressure on domestic logistics firms
EVFTA expected to create great pressure on domestic logistics firms
BUSINESSicon  20/03/2020 

The expected execution of the EU-Vietnam Free Trade Agreement in 2020 will create great pressure on Vietnamese logistics businesses, insiders said.

Ministry cuts, exempts fees of 15 securities services to support stock market
Ministry cuts, exempts fees of 15 securities services to support stock market
BUSINESSicon  20/03/2020 

The Ministry of Finance has cut the fees of nine securities services and exempted fees for six others as from March 19 as part of efforts to support the stock market amid the negative impact of the COVID-19 epidemic.

How are Vietnamese businesses managing during the Covid-19 crisis?
How are Vietnamese businesses managing during the Covid-19 crisis?
BUSINESSicon  20/03/2020 

While tourism, transportation and F&B sectors are suffering heavily from Covid-19, the impact on other business fields has been less severe.

VN digital payment market reshaped because of new rules
VN digital payment market reshaped because of new rules
BUSINESSicon  21/03/2020 

A new payments market will be created with the presence of more players, including commercial banks, fintechs, telcos and foreign investors.

Supporting industries secure more orders following Chinese supply disruptions
Supporting industries secure more orders following Chinese supply disruptions
BUSINESSicon  19/03/2020 

A number of local firms in supporting industries have been receiving more orders from foreign partners due to the coronavirus outbreak disrupting supply chains in China.

 
 
 
Leave your comment on an article

OR QUICK LOGIN