Reduce 50% of registration fees – a stimulus for domestic cars till the end of 2020

	Ministry of Finance submits draft decree on registration fee for cars to the Government
	When were manufactured and assembled automobiles domestically eligible for registration fee reductions?
	50% reduction of registration fees to rev up domestic car sales

A 50% reduction in registration fees for domestically manufactured and assembled cars is a solution contributing to directly reducing costs for car ownership registration, increasing consumers’ accessibility to cars, thereby contributing to encouraging customers to return to buy cars after the pandemic. Photo: HP

Reduction till the end of 2020

Accordingly, from June 28 till the end of December 31, 2020, the registration fee for cars, trailers or semi-trailers pulled by cars and similar vehicles manufactured and assembled domestically is 50% of the rate specified in the Government's Decree No. 20/2019 / ND-CP amending and supplementing a number of articles of the Government's Decree No. 140/2016 / ND-CP on registration fees and current Resolutions of the People's Councils or the current Decisions of the People's Committees of provinces and centrally run cities on the registration fee rates in their localities.From 1 January 2021 onwards, registration fees will continue to comply with the provisions of Decree No. 20 and the current Resolutions of the People's Councils or the current Decisions of the People's Committeesof provinces and centrally run cities directly under the Central Government on the registration fee rates in their localities.

According to current regulations, the registration fee for cars, trailers or semi-trailers pulled by cars and similar vehicles is 2%.

Particularly, passenger cars with nine seats or less shall pay the first registration fee of 10% (People's Councils of provinces and centrally run cities shall decide the rate increase but the increase does not exceed 50% of the general prescribed rate). The rate from the second registration time onwards is 2%.

For pick-up trucks with transport volume of less than 1,500kg and five seats or less, trucks with a transport volume of less than 1,500kg shall pay the first registration fee equal to 60% of the first registration fee rate for passenger cars with nine seats or less. The rate from the second time onwards is 2%.

Purchasing power decreases, consumption is difficult

According to statistics from the Ministry of Finance, the revenue from registration fees for cars accounts for a large proportion of the total registration fee revenue and increases year by year. Specifically, in 2017 it accounted for 69%; 2018 69.7%; and 2019 74.6%. The revenue from registration fees for domestically manufactured and assembled cars is about VND16,000 billion per year.

However, from December 2019, the Covid-19 pandemic broke out in China and quickly spread to countries around the world. Currently, Vietnam has initially controlled the pandemic, but the disease situation in the world continues to be very complicated and shows no signs of slowing down.Many industries are seriously affected, including the domestic automobile assembly and manufacturing industry.

During the period of social distancing, most of the large car manufacturers and assemblers such as Thaco, Thanh Cong, VinFast, Toyota, Honda and Mercedes had to suspend production and assembly activities. The Covid-19 pandemic disrupted the supply chain and the demand for cars declined.

According to the Vietnam Automobile Manufacturers Association (VAMA), for the first four months of 2020, total sales decreased by 38.8% (only 60,825 cars) compared to the same period in 2019. Of which, domestically assembled cars decreased by 33% while imported cars decreased by 40% compared to the same period in 2019.

In addition, enterprises in the value chain such as transporters, suppliers and distributors also faced difficulties in supply chain, significantly reducing revenue.

Up to now, the Covid-19 pandemic in Vietnam is under control, automobile firms have restarted production and resumed supply chains. However, due to the serious impact of the Covid-19 pandemic, the reproduction and resumption of supply chains will face many difficulties, especially for domestic automobile manufacturing and assembly enterprises due to high inventories, so the production and assembly capacity is currently at a very low level.

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The main reason is that car consumption is facing many difficulties due to a sharp decrease in domestic purchasing power. Enterprises forecast that due to the impact of the Covid-19 pandemic, the car market is not only affected in 2020 but may continue in the following years.