Tax up, used cars have no way into Vietnam

16:17' 18/04/2008 (GMT+7)
VietNamNet Bridge – The tax increases of $300-3,000/unit on used imports effective as of April 2, 2008 have really closed off all ways for used cars to enter Vietnam.
Car importers say that the high taxes on used imports have made them more expensive and not attractive in the eyes of consumers any more, except super luxury cars.
With the lowest increase of $300/unit (increasing from $2,700/unit to $3,000/unit) on models with cylinder capacities of less than 1,000 cc, the prices of used Kia Morning and Daewoo Matiz after tax will be $500/unit higher on average. Meanwhile, 2,500-3,000 cc models, which see the tax rising from $12,000/unit to $15,000/unit (+ $3,000), will have prices up by $5,000/unit.
The tax rate remains unchanged for 4,000-5,000 cc models. However, if compared to the days prior to November 3, 2007, tax rates have increased by 20% (tax rates rose from $22,000 to $26,400 for 4-5,000 cc and from $26,250 to $30,000 for over 5,000 cc models as of November 3, 2007). With the 20% tax increase, every car of these types has become $15,000 more expensive.
Previously, a 1-year used Kia Morning had the sale price of $16-17,000. With the new tax rate, it will have the sale price of 16,500-17,500, equal to the price of a brand new Morning assembled by Truong Hai Auto, which means that used imports will not be able to compete.
Imported 2,500-3,000 cc models will also not be able to compete with locally made products as they will see price increases of $5,000. A used Toyota Camry 3.0L, for example, will have the sale price of over $50,000, which proves to be uncompetitive.
Car traders have given up used car imports. A representative of Vinh Hoang Company said that used cars do not attract consumers anymore due to the overly high prices.
However, the fixed tax rates on super luxury models ($30,000 for cars with over 5,000 cc in cylinder capacity) are considered very low, and car traders are ready to import these models if they can find customers.
Most luxury models like Maybach and Phantom all have cylinder capacities of over 6,000 cc. The import prices of these models are very high, over $300,000 for brand new units, and the import taxes are also high at $210,000. Therefore, customers would rather buy used luxury cars than brand new. It is estimated that the gap between the post tax prices of brand new and used imports may reach $300,000.
In 2007, an imported used 6,749 cc Phantom was taxed $189,900, and it had the post tax price of $405,900. Meanwhile, the brand new car, which had the import price of $333,350 (quoted on Internet), had the sale price of $879,000.
The fixed tax rates on used imports, effective as of April 2, 2008
The tax rates for cars carrying five persons at maximum
Cylinder capacity
Tax rates (US$/unit)
Less than 1,000 cc
3,000
1,000-less than 1,500 cc
7,000
1500cc – 2,000cc
9,000
Over 2000cc – less than 2,500cc
13,500
2,500cc – 3,000cc
15,000
Over 3,000cc -4,000 cc
18,000
Over 4,000 cc- 5,000 cc
26,400
over 5,000cc
30,000
Tax rates on cars carrying 6-9 persons
Cylinder capacity
Tax rates (US$/unit)
Less than 2,000 cc
8,100
Over 2,000 – 3,000 cc
12,600
Over 3,000 cc-4,000 cc
16,000
over 4,000cc
24,000