MOF has consulted with ministries and branches about slashing the vehicle registration tax by 50 percent for six months (August 1, 2024 to January 31, 2025) on domestically assembled cars.

Though the tax cut proposal remains on the table and still needs agreement from several agencies before it is submitted for final approval, the news has had a great impact on the automobile market.

Nguyen Lan Phuong, 33, from Hoang Mai district in Hanoi, had previously decided to buy a THACO CUV (crossover utility vehicle) in May after considering many different models.

However, she postponed her plan at the last minute after she heard about the tax cut. She planned to buy after an official decision about the tax cut, because cars would be cheaper after the decision. 

“The car I planned to buy was nearly VND700 million. If the government approves the 50 percent vehicle registration tax cut, I would be able to save VND40 million, which is worth waiting for,” she explained.

However, Phuong has become impatient in recent days because no official decision has been made and car dealers have told her that she needs to decide about whether to buy right now. 

According to Phuong, car dealers are offering attractive preferences for some imported B-size crossover models, including the 50 percent registration tax cut, discounts, and spare parts. 

She said she may consider buying an imported product now, rather than wait for the preferential tax on domestically assembled products. 

Do Minh Thanh, 45, from Ha Dong district in Hanoi, is eyeing a domestically assembled SUV. He estimates that if he waits and buys the car after the government approves the tax cut proposal, he will save VND60 million. 

Auto manufacturers and sales agents are also awaiting the policy.

Luong Thanh Tuan from Honda My Dinh in Hanoi said a sales agent can sell 200-250 cars each month. However, sales have decreased in recent months as the news about the tax cut spread. They sold 140 products in May and 100 in June.

Tuan explained that the tax cut, if approved, will allow buyers to save big money. Honda CR-V and Honda City buyers, for example, can save VND30-65 million thanks to the new tax policy.

In addition to the preferential registration tax policy, Honda has repeatedly offered price reductions in recent months for these two models. Honda buyers could thus get preferences from both the government and manufacturer.

Nguyen Van Binh, a salesman at a Mercedes Benz agent, confirmed that many car buyers have requested delayed deliveries until an official statement about the tax policy is released. 

However, many car buyers have become impatient as they have been waiting for the new policy for a long time and have decided to buy imported cars and inventory products (VIN 2023). 

Car buyers have been told that if they do not buy cars at this time, they may not get the cars delivered as products may run out, and they may no longer enjoy preferences. 

If this happens, the money they may lose would be even higher than the amount they could save after the 50 percent vehicle registration tax cut.

Policy to save domestic auto market

Analysts said pressure from inflation, the exchange rate, and gold price hikes have had a big impact on the market as consumers have tightened their purse strings and cancelled car purchases. Therefore, cutting the registration tax to stimulate demand is a necessity.

The total number of automobiles sold by the Vietnam Automobile Manufacturers Association’s (VAMA) member companies and Hyundai Thanh Cong joint venture was VND127,643 by the end of May 2024 (108,309 cars as reported by VAMA and 19,334 reported by Hyundai). 

The figure represented a sharp fall of 47.2 percent compared with the last six months of 2023 (241,796 cars) and 6.44 percent drop compared with the same period in 2023 (136,430).

Dinh Quy