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Vietnam: Domestic automakers increase output in anticipation of 50% registration tax cut
While car imports have slowed down, domestically assembled output has increased sharply. Manufacturers are preparing for the year-end sale season, when domestically made cars will enjoy a 50 percent vehicle registration tax cut.
A report by the General Statistics Office (GSO) released on June 29 showed that 42,500 cars were added to the Vietnamese market in June, including imports and domestically assembled products, an increase of 20.7 percent over May.
This included 8,000 CBU (complete built units) cars last month worth $226million. If compared with the 7,608 cars imported in May and import turnover of $191.2 million of the month, according to the General Department of Customs (GDC), imports increased slightly by 5.1 percent in quantity and 18.2 percent in quality.
However, imports remain very low and there has been no sign of recovery. Compared with the same period in 2022, import volume in June 2023 dropped sharply by 37.7 percent in quantity and 24.1 percent in quality.
As such, in the first half of the year, 69,954 cars were imported to Vietnam with total import turnover of VND1.627 billion, up 9.9 percent in quantity and 3.7 percent in value, compared with the first six months of 2022.
While imports have leveled off, the output of domestically assembled cars is on the rise.
GSO reported that the number of automobiles assembled domestically reached 34,500 in June, the highest level in 2023, up 28.6 percent over May (27.600). The figure represented a 13.5 percent increase over the same period last year.
As such, the total number of automobiles manufactured and assembled in Vietnam in the first half of 2023 was 168,700, or 81.8 percent of the same period in 2022.
The sharp increase in car output in June was a surprise to automobile exporters as the situation differed from previous years. In general, manufacturers usually begin increasing output from August to October, before the market begins the year-end sale season.
The increase from auto manufacturers in June was attributed to the new policy on the vehicle registration tax cut. Decree No 41 released June 28, 2023 stipulates that the tax has been cut to 50 percent, applied to domestically assembled cars, starting from July 1 until December 31, 2023.
Analysts say the move, to some extent, would increase the attractiveness of domestically assembled cars, thus stimulating demand from now until the end of the year. Manufacturers must prepare products to satisfy demand expected to be spurred by the new policy.
Analysts believe that the demand for imports would come back in September, or the seventh month of the lunar year which is called the month for forsaken souls.
Hoang Hiep
Source: https://vietnamnet.vn/en/domestic-automakers-increase-output-in-anticipation-of-50-registration-tax-cut-2161520.html