Locally-assembled cars between 2018-22. — VNS graphic Doan Tung

The Government has asked the Ministry of Finance and other relevant ministries to devise a 50 per cent cut on auto registration fees for locally assembled or manufactured cars which aims to support the domestic automobile industry.

This is the content contained in Resolution No. 31/NQ-CP of the Government's regular meeting reviewing February 2023. The resolution emphasises the importance of developing the domestic market and promoting exports.

Earlier, two associations have proposed the Government halve the registration fee for locally assembled or manufactured cars during the first half of the year to boost market demand.

In a letter sent to the Prime Minister, both Vietnam Automobile Manufacturers Association (VAMA) and the Vietnam Association of Mechanical Industry (VAMI) also jointly asked for an extension of the deadline to pay excise tax.

Both policies should be imposed in the first quarter or early second quarter, they added.

The registration fees are calculated based on car prices in each locality. The rates are 12 per cent in Ha Noi and Hai Phong, and 10 per cent in HCM City.

The proposals were made amid bleak business conditions, which have resulted from difficult access to tightened credit policy, high interest rates, market liquidity problems and rising auto inventory.

The Vietnam Automobile Manufacturers’ Association (VAMA) saw 17,314 units sold in January, down 51 per cent from December. Sales volume of locally-assembled cars reached 8,086 units or 54 per cent down while imported vehicles were down by 48 per cent to 9,228 units.

Sales of the Thanh Cong Group, which assembles Hyundai cars, dropped 52 per cent to 3,496 units. And VinFast’s sales of 358 units was down 83 per cent. TC Motor has forecast that Viet Nam’s auto industry will see a 17.5 per cent drop in sales this year compared to last year, which is equivalent to 85,500 unsold cars.

Although car manufacturers are giving discounts to boost sales of domestically assembled cars, they still need a boost from policies to help the market recover. This is an unusual and ominous signal because the months before Tet are usually the time when sales are high.

VAMI said that the supporting industry had been receiving less orders this year, and that if sales did not bounce back, factories would have to reduce staff, which would hurt the economy.

According to the associations, although car manufacturers are giving discounts to boost sales of domestically assembled cars, they still need a boost from policies from the Government to help the market recover. The market needs a stimulus package like in 2021-2022.

In December 2021, the Government issued a resolution to reduce the car registration fee by 50 per cent. The fee cut came after the fourth wave of the COVID-19 pandemic had inflicted heavy damage on almost all sectors of the economy, including the automotive industry, and helped auto sales bounce back. However, the fee returned to normal in 2023. — VNS