Car sales speed up following tax break

Tuoi Tre

Car sales of locally-made units surged over the past three months after the government cut registration fees in half on May 1.

The new fee, lowered to 5-6 percent from May 1 to December 31, 2009, has resulted in an increase in sales of 1,000 units per month.

According to the Vietnam Automobile Manufacturers Association (VAMA), sales rose in May to 8,707 cars from 7,711 in April.

June saw 9,699 cars sold and an official of the VAMA estimated that figure to increase to nearly 11,000 for July.

The tax break is the fourth automobile taxation adjustment by the government this year. Pundits have criticized Hanoi for struggling to stick with a consistent plan as it rolls out knee-jerk reactions to problems such as pollution and traffic congestion.

A Ford Vietnam sales agent said the flood of orders has led to waiting periods of two months for customers expecting delivery.

Following the tax break, the VAMA lifted their 2009 sales target to 140,000 cars from the 110,000 that was penciled in earlier.

Automobile taxes are complicated in Vietnam. Owners must pay three different tax categories – Registration, Value Added Tax of five percent, Excise Tax (or Special Consumption Tax) from 40 – 60 percent based on engine displacement.

Imported cars are hit with an additional levy of Import Tax at 83 percent.

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