Automotive market: "Busy" at the end of the year?

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The demand of cars may be more than 300,000 units.

Buyers hesitate

In automotive shops on Gia Lam road (Hanoi) on the weekend, a reporter of the Customs Newspaper found that there were many customers browsing but there were very few people signing contracts to buy cars. The owner of an automotive shop that sells used cars said that customers were waiting for information related to automobiles. Firstly, it is unclear for authorities to apply Circular 20 (TT20/2011/TT-BCT of the Ministry of Industry and Trade) and customers do not know whether the National Assembly puts cars on the list of conditional trading type? Secondly, there is a problem of collection of tax arrears for cars purchased before 1^st July 2016 and a higher special tax consumption rate for cars purchased after 1^st July 2016. In addition, from 1^st January 2017, import tax for cars in the region will be reduced. All these policies will strongly impact cars’ price, so consumers are not sure whether this is the best time for signing a contract to buy cars. In fact, earlier, this shop could sell 5-7 cars per day, but now they can not even sell 1 car per week.

For genuine car agents, the car consumption is at a normal level except for a few new models which are paid much attention from customers. For example, the new Innova is attracting customers. However, due to lack of spare parts, customers have to wait for purchases of this type of car. Especially, Toyota also has sold Vios cars at a high rate. In October 2016, 2,148 Vios cars were sold, the highest rate in the car market. In addition, Ford Ranger, Honda City cars and Mazda3 cars of Thaco have been paid much attention. Mercedes Vietnam also attracts customers a lot with various models.

However, the remaining models of cars are selling quite slowly.

Speaking to a reporter of the Customs Newspaper, all agents said: Although consumption is still growing, but not as expected. As usual every year, this time is the best time for consumption of cars. However, currently customers still wait for policies, especially when many customers expect cars with a cheaper price in 2017 with a reduced import tax.

Sellers are worried

Most automotive shops said that it is difficult to predict the automotive market at the end of 2016.

The Head of Sales Division of a company specializing in importing cars in Hai Phong Province said that his company imported about 100 cars, but when customers heard that they would pay a higher special tax consumption after 1^st July 2016, they stopped buying and terminated the signed contracts. Although his company accepted to sell at a lower price but the situation remained unchanged.

A representative of a Ford agent said: “The car price will not decrease in the near future due to revised special consumption tax. Last year was the time for automotive agents to promote sales, so they may reduce the price a little bit. In 2017, import tax for cars will decrease, but special consumption tax will increase.

Although automotive agents have tried to seek various solutions to release cars and promote sales at the end of the year, the rate of car consumption is not high because consumers still wait for change of policies.

Another factor that makes consumers pay more attention to the automotive market is that the supply is facing difficulties.

The amount of cars in the form of donations and gifts are very few because the authorities strictly prevent the misuse of the policies to import vehicles for the purpose of tax fraud. Used cars now are not imported as many as the previous time due to a higher special consumption tax rate (especially for cars with capacity of 2.5L or more from 1^st July 2016). In addition, the price of old cars also increases dramatically (because old cars are currently applied the absolute level of import tax which is higher than the previous one, and consumers do not accept the new price in the market).

For vehicles which are manufactured or assembled in the domestic market, many enterprises have not dared to make specific plans for production. Because a significant policy which strongly impacts the automobile industry in the country has not been "decided".

Genuine imported cars, from 2011 to 1^st July 2016 were applied provisions of Circular 20/2011/TT-BCT of the Ministry of Industry and Trade only for businesses with authorized genuine paper and businesses with certificate of warranty and maintenance issued by the Ministry of Transport. Meanwhile, from 1^st July 2016, Circular 20 expired, but due to lack of legal documents in this field, the authorities still continue to implement provisions under Circular 20. Because the list of business conditions (including automobile maintenance and warranty) expired from 1^st July 2016, the Ministry of Transport has not issued any certificate of warranty and maintenance for businesses to be "qualified" to import.

Dozens of banned automotive engines in transit shipments VCN - In the afternoon 17th August, at Cat Lai port – HCMC, Customs Branch of Saigon ...

It is easy to see that the demand of cars does not decrease. Therefore, after the period of "waiting" for new policies, the market will continue to be busy. On the other hand, with a reduced supply of cars, the market will have a "fever" in the short term, especially on the occasion of Lunar New Year.