Author: Mei Ling Tan

Việt Nam spent more than US$2.15 billion importing 94,000 cars last year, marking a year-on-year decrease of 16.8 per cent in volume and 9.6 per cent in value.

This was revealed by the General Statistics Office.

The domestic automobile market witnessed many uncertainties last year. Notably, in the first half of the year, after the tax rate of complete built-up units (CBUs) import from ASEAN countries dropped to 30 per cent, the auto import turnover remained constantly high. However, in the second half of the year, the import turnover fell to low levels in both quantity and value.

The uncertainty of CBUs auto import turnover in 2017 clearly reflects the evolution of the market.

The decline in turnover shows a paradox. The car import market in 2017 benefited from the import tax of Southeast Asian-origin vehicles down by 10 per cent (to 30 per cent) and car import tax from countries enjoying the status of the Most Favoured Nation decreased by five per cent. With such a decrease, the auto import turnover should have accelerated; however, the figures remarkably reduced.

Meanwhile, the tax rate of CBUs imported from ASEAN countries has officially reduced to zero per cent from January 1. But the market is yet to recover.

According to Nikkei Asian Review, Toyota said on Tuesday that it has halted all production for export to the Vietnamese market. The Japanese automaker manufactures locally in Việt Nam, but imports from Thailand, Indonesia and Japan account for some one-fifth of what it sells in the market, or 1,000 units every month. Models imported include the Hilux pickup trucks, Yaris subcompacts, sports utility vehicle Fortuner and luxury car Lexus.

“The Vietnamese market slowed down last year clearly because consumers refrained from buying as they waited for the tariff removal at the end of 2017,” Toyota Motors Thailand President Michinobu Sugata told reporters in Bangkok.

Indeed, auto sales in Việt Nam between January and November last year slumped 10 per cent to 245,000 units. “We were anticipating a big jump in 2018, but due to the non-tariff barriers set by the Vietnamese government we cannot export to the market at all,” he said.

Announced in October, Decree 116 requires emission and safety tests to be conducted on every batch of automobile to be imported. In the past, only the first shipment of each model would be tested. One emission test could take two months and cost up to $10,000, according to a statement of the Japanese Chamber of Commerce and Industry in Việt Nam.

The decree also requires all models to obtain a Vehicle Type Approval certification issued by authorities of the exporting country. VTA certifications are to show that the vehicle meets standards of the country it will be sold in and is normally issued by domestic entities of the exporting country.

Since the decree was announced, major exporters from Japan, Thailand and the United States have expressed concerns that it would become impossible for them to sell in Việt Nam.

Phạm Anh Tuấn, head of the Vietnam Automobile Manufacturers’ Association (VAMA)’s Policy Subcommittee, told Việt Nam News that car manufacturers had not imported cars since January 1. The Vietnamese automobile market currently had only a few vehicles that were imported by the end of 2017, he said.

For Toyota Motor Việt Nam, the latest import was towards the end of October last year.

Tuấn also said VAMA had sent a letter of petition four times to the government regarding the content related to Decree 116.

“VAMA would like the Government to delay the enforcement of the regulations on the import of cars in Decree 116 for six months to help its members prepare well in time. In addition to this, VAMA also proposed to revise the regulation that requires auto importers to submit Vehicle Type Approval certification of automakers as well as changing the requirements for conducting tests on each batch of imported cars,” said Tuấn.