Automobile imports surge to five-year high

According to the General Office of Statistics, as many as 51,000 cars were imported in the country in the January-October period, worth US$1.1 billion, up 76% in quantity and 93% in value, year on year.

In October only, the number of car imports reached 7,000 units, worth US$150 million, similar to September's data.

The imported automobile market has been stable since June this year as the number of imported cars remained at 6,000 units and above per month, the highest number in the last five years.

"Car sales in Vietnam seem to be unaffected by the struggling economy, with most brands reporting better business," said Nguyen Van Dung, general director of Northern Auto, a prominent car importer in Hanoi.

Dung said that the last two months of the year are likely to see more imports following the shopping season.

"We expect sales to increase by 30% towards the end of the year," he added.

In 2013, there was a marked increase in the number of imported cars. As many as 34,500 cars, valued at US$709 million, were imported, marking an increase of 25.9% in volume and 15.2% in value, year on year.

Meanwhile, according to the Ministry of Finance (MoF), several types of vehicles will enjoy import tariff cuts from next year, in line with Viet Nam's commitment to the World Trade Organisation (WTO) on tax reduction.

The cuts are likely to further boost car imports, while posing a serious threat to the country's auto industry, which is expected to compete with the price and quality of imports.

MoF, which drafted the plan, said that all tariff cuts will take effect on January 1, 2015. It added that the tax on four-wheel-drive (4WD) vehicles will be reduced from 70% to 59%, while the import tax on trucks with a loading capacity of less than five tonnes will be reduced from 59% to 56%.

The tax on motor homes, or self-propelled recreational vehicles which offer living accommodation, and on cars with less than 10 seats and an engine capacity of less than 2.5 litres, will be cut from 67% to 64%. The tariff on motorcycles, sidecars and mopeds will also be reduced from 47% to 40%.

Meanwhile, ASEAN members' auto imports are already receiving a preferential 50% import tariff since early 2014, as a result of the ASEAN Trade in Goods Agreement (ATIGA). In addition, under commitments made to the ASEAN, auto import taxes will be completely abolished in 2018.