The Ministry of Industry and Trade (MOIT) reported that in Q1, many key manufacturing and processing industries, influenced by Covid-19, had an IPP index lower than the same period last year (except electronics).
Engine vehicle manufacturing is one of these industries. The IPP of the industry decreased by 2.5 percent. It rose by 20.8 percent the same period last year.
The domestic automobile output was 56,200 products, down by 10.4 percent compared with the same period last year. The inventory index of the industry was also high, 122.5 percent of theh same period last year.
Most large automobile manufacturers including Thaco, Thanh Cong, VinFast, Toyota, Honda and Mercedes had to suspend operation for a couple of weeks because of the social distancing policy.
|After the Prime Minister loosened social distancing, most automobile manufacturers and sales agents have resumed their operation. However, the production capacity is maintained at a moderate level because of the high inventory index.|
After the Prime Minister loosened social distancing, most automobile manufacturers and sales agents have resumed their operation. However, the production capacity is maintained at a moderate level because of the high inventory index.
In order to support the automobile industry, MOIT has asked to release the government’s resolution on measures to develop supporting industries.
The ministry also has asked to submit to the National Assembly a plan to amend the luxury tax law and VAT law (refunding tax soon to help businesses accumulate capital), and corporate income tax law (giving incentives to enterprises in the key mechanical engineering industry).
In early April, MOIT proposed the Prime Minister to cut the vehicle registration tax rate by 50 percent, applied to clients buying domestically assembled products until the end of 2020.
As for automobile manufacturers and assemblers, MOIT proposed to extend the VAT, luxury tax and corporate income tax payment deadline until the end of Q1, 2021.
Prior to that, VAMA asked the government to cut 50 percent of VAT and 50 percent of registration tax to help stimulate the demand.
VAMA’s Nguyen Trung Hieu said on Giao Thong newspaper that it will take the automobile market a lot of time to recover if there is no policy to stimulate the demand.
According to Hieu, the benefit for customers from the 50 percent registration tax cut is clear. Meanwhile, the 50 percent VAT cut on materials will help reduce the car prices and thereby also benefit buyers.
If the registration tax is cut by 50 percent, the buyers in Hanoi would have to pay VND83.94 million in registration fee when buying a Mazda CX-8 instead of VND167.88 million.
Meanwhile, the buyers of Mercedes-Benz E300 AMG valued at VND2.92 billion, would have to pay VND175.2 million instead of VND350.4 million.
With tax and fee decreases, automobiles will be cheaper than ever
If the government agrees to slash taxes and fees for domestically assembled cars, this will be a ‘doping dose’ for domestic automobile manufacturers and consumers.
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