VietNamNet Bridge - The tariff on CBU (complete built unit) car imports from ASEAN will be cut 30 percent in January, but consumers are concerned that selling prices will remain the same. 

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The cost for every car to Vietnam would decrease by $500-1,000. If so, analysts say the CBU imports from ASEAN would have the selling prices nearly equal to domestically assembled products. 

This will force automobile manufacturers to slash their selling prices or run promotions to attract buyers.

As the tariff is cut, it would be less profitable to assemble cars in Vietnam, which would prompt manufacturers to import models to sell in Vietnam instead of assembling domestically. Toyota Vietnam, for example, has decided to import Fortuner from early  next year.

From January 1, 2018, the tariff on the imports from ASEAN will be cut further to zero percent. Meanwhile, the luxury tax on small-size cars with the cylinder capacity of 1.5L and lower will also be cut from 40 percent to 35 percent. The tax rate will be lowered to 40 percent from 45 percent for 1.5-2.0L models.

It is estimated that fewer than 2.0L models from ASEAN would see prices going down by 25-40 percent.

With the expected tax cuts, analysts believe that enterprises would focus on small models with the cylinder capacity of 2.0L and lower. They will have to update continuously to satisfy customer requirements and retain their market share, which will benefit customers and the market.

The tariff on CBU (complete built unit) car imports from ASEAN will be cut 30 percent in January, but consumers are concerned that selling prices will remain the same. 
However, some analysts warned that prices would decrease only when dealers have the right to import cars.

The Ministry of Industry and Trade’s Circular 20, which prevents many car dealers from importing cars to distribute in the domestic market by setting strict requirements, has expired. 

However, strict requirements still exist and enterprises can only import cars if they have certificates of authorization from manufacturers. 
A car importer describes Circular 20 as a shield that protects big enterprises and keeps small enterprises away from the market. Meanwhile, all enterprises, both and small, have the equal right to join the market.

There are two scenarios for the future. If the requirements are removed, cars will be imported in large quantities by different importers. If so, the competition will force the prices down.

With the second scenario, no considerable change is expected. 

VAMA has proposed to amend the Investment Law and add car trading to the list of conditional business fields. If the proposal is approved by state management agencies, small car dealers won’t have the opportunities to join the market.


Tran Thuy