VietNamNet Bridge – A lot of automobile manufacturers and car dealers, who have been weeping bitterly because of the slow sales caused by high taxes and fees, have shifted to another undertaking – trading pick-ups.

Pick-up story in hot debate

The Vietnam Automobile Manufacturers’ Association (VAMA), in a document released some days ago, pointed out that different ownership registration tax rates on pick-ups have been imposed in different localities.

The current vehicle car registration ownership tax on pick-ups is 2 percent in Hanoi. Meanwhile, the 10-20 percent tax rates are imposed in HCM City and many other provinces.

The association of automobile manufacturers stressed that the inconsistent tax policies applied in different localities not only created discriminatory treatment to users, but have also put big difficulties for automobile manufacturers and car dealers,

VAMA has said it has successfully persuaded the taxation agencies in some cities and provinces to apply the 2 percent tax rate to pick-ups, including Hanoi, Hai Phong, Quang Ninh, Da Nang, Dong Nai and Binh Duong.

Meanwhile, other localities refuse to apply the two percent tax rate, saying that the legal documents are not clear enough. Of course, a low tax rate for users in all localities is the thing automobile manufacturers want, because this would help boost sales.

Pick-ups would replace sedans?

If compared with sedan, MPV or SUV models, pick-ups clearly have bigger advantages in terms of policy. A pick-up imported under the mode of complete built unit (CBU) bears the import tariff of 5 percent, while the above said models would bear over 70 percent. Meanwhile, the luxury tax on pick-ups is 15 percent, much lower than the tax rates of 45-60 percent imposed on the other vehicles.

As such, if the two percent registration ownership tax is applied throughout the country, pick-ups would easily penetrate the Vietnamese market. Especially, pick-ups would not be imposed a kind of fee set up to restrict private vehicles, if the kind of fee is applied in the future.

Meanwhile, pick-ups have been upgraded significantly recent, thus turning more luxurious and convenient. Pick-ups nowadays are not simply the vehicles to carry cargo any more.

With the improved interior facilities and designs, pick-ups have become the choice of many families, because they can both carry passengers and cargoes.

Official reports have shown that the number of pick-ups sold in Vietnam has been increasing steadily. In 2011, Ford Vietnam sold 1151 Ranger pick-ups out of the 8697 cars sold, Mitsubishi sold 787 Triton pick-ups (2184), Nissan sold 500 Navara pick-ups.

Vietnam to become a lucrative market for Thai manufacturers?

Most of the pick-ups sold in Vietnam are the CBU imports from Thailand. The sale prices of the products are less than 700 million dong. If the two percent ownership registration tax rate is applied, the total expenses on a pick-up would be relatively low; therefore, pick-up can be a good choice for many people. Meanwhile, car dealers have been advertising for pick-ups widely in the domestic market.

Pick-up has been the strategic car line in Thailand over the last many years. In golden age, the output of pick-ups accounted for 75 percent of the total vehicles assembled here. In Thailand, there is one pickup in every 10 cars in circulation on streets. Thailand has also been known as the biggest pickup exporter in the world.

As such, once Vietnam becomes a big pickup market, this would be a lucrative market for Thailand. Meanwhile, the domestic automobile industry would not get any benefits from this. Since the import tariff is too low, at five percent, which would drop to zero percent, it would be unprofitable to import parts to assemble in Vietnam.

Tran Thuy