Car sales in Vietnam to soar despite price hike
The cost of buying a new car in Vietnam is expected to sky-rocket starting early 2005 because of a government decision to increase tariffs on automobiles, but the market is likely to continue booming.
As planned, the government will raise the excise duty on five-seated cars to 40 percent from the current 25 percent. The new tax rate will go into effect on January 1, 2005.
Sky-high prices
The tax hike will raise car prices by about 10 percent on average, according to automakers.
The cost of a Mercedes E240, the most expensive car in Vietnam, will shoot up $US 18,000 to total $US 117,000 as of January 1, a Mercedes Benz sales agent in Hanoi said.
The Vietnam Motors Corp., assembler of BMW and Mazda automobiles, said the price of a Mazda6 will rise by $US 5,600 to total $US 42,500, while a Mazda3 will increase $ 4,400 to $ 35,200.
Other major car producers like Toyota Motors Vietnam (TMV) and Ford Vietnam (FVN) have not yet made any announcements, but both are expected to mark up their car prices by 10 percent.
Flourishing industry
Despite the price rise, auto industry sales still show no sign of abating. An automakers’ prediction that the industry would collapse when the government raised taxes has proved wrong.
After dropping in the first half of this year, car sales rebounded strongly in the second half, according to automakers.
Currently, TMV’s stock has dried up and it said that clients must wait until the second quarter of 2005 to buy a Toyota. 3,000 customers are currently waiting to buy new Toyotas.
The firm has set up a service center with an estimated investment of 110 billion VND (Vietnamese dong) in Hanoi. One billion Vietnamese dong is equivalent to about $US 66,000.
Meanwhile, FVN in November for the first time saw higher sales that that of its competitors with 952 cars sold. Certain Ford models are sold out, and customers will also have to wait until 2005 to buy new Fords, sales agents said.
The market may possibly shrink slightly in the first quarter of 2005 as a result of spiraling prices but will boom again this summer, predicted car makers.
Reported by Luu Quang Pho – Translated by Hieu Trung.
Story from Thanh Nien News
Published: 28 December, 2004, 22:15:27 (GMT+7)
Copyright Thanh Nien News
