Despite continuous price cuts by auto manufacturers and dealers for the last two months, the market has remained to be gloomy as customers have been likely to wait for price drop to bottom levels when import tariff on products imported from ASEAN will reduce to 0 percent on January 1, 2018.
Toyota dealers have cut the price by VND50 million to VND500 million a Vios car, much lower than that in early this year. Prices of old Camry versions has slid by VND75-100 million.
Truong Hai Auto Corporation (Thaco) has slashed prices of Mazda types which it is distributing in Vietnam. The most cut has been VND45-106 million on Mazda 6. After record reductions in previous months, Mazda CX-5 2017 price has furthered drop an extra of VND20-41 million.
Taking the lead in the price cut list is SUV Pajero Sport of Misubishi Vietnam Joint Venture. Of these, seven seater type has decreased VND198 million to VND704 million a car. In addition, all Mitshubishi car models have slid by VND40-170 million but they have still been unsold.
After dropping to VND730 million, VND766 million and VND835 million, the prices of Honda CR-V 2.0AT, A.4 AT and 2.4AT-TG have no considerable changes. However, they have been sold out.
Despite the strong cuts, purchasing power has fallen by 50 percent. That might be because customers have been waiting for 0 percent import tariff and special consumption tax cut next year.
With the price reductions of many lines of cars, dealers have nearly been profitable or earned very little, still they have been forced to implement promotional and discount programs to stimulate demand and obtain set targets, said a representative of Toyota East Saigon Company.
Reports from Vietnam Automobile Manufacturers Association (VAMA) show that in September, the market sold only 21,216 automobiles, down 20 percent over the same period last year.
Of these, passenger cars moved down 7 percent, commercial vehicles 7 percent and specialized automobiles 18 percent over the same period last year.
During the first nine months this year, 71,559 automobiles were imported, sliding 7.7 percent in volume and 13.1 percent in value over a year ago. VAMA said that auto businesses have faced with increasing inventory volume.
2018 will come in two months and import tariff will drop to 0 percent. However, many experts said that the preferential tax rate will be applied for products from ASEAN with the localization rate in the region of 40 percent.
Cars imported from other nations or not meeting the localization rate requirement will not enjoy the special treatment.
In addition, the Government has recently issued Decree 116/2017, effective from October17, to stipulate conditions on auto manufacturing, assembly, import and maintenance service business. It does not untie import cars as many people expected but tighten regulations.
According to the new regulations, each consignment of import automobiles must pay the fee of VND30-40 million and will experience strict inspection.
Hence, auto prices will be difficult to reduce if the import volume is not high and costs increase. That might lead to price manipulation without close control from the state, said Mr. Hoang Van Cuong, director of Hoang Son Auto Export Import Company in Binh Tan district.
Source: SGGP