Notably, the VAMA decision was made before special consumption tax and import tax reductions come into effect as from January 1, 2006.  

Pham Chi Lan, member of the Prime Minister’s Research Board, said the Competition Law prohibits members of a certain association from teaming up to cause adverse impacts on consumers. The decision runs counter to the market development trend and VAMA could face punitive measures under the Competition Law, she said.

Lawyer Pham Liem Chinh from the Hanoi Lawyer Team said VAMA’s decision to change and fix automobile prices violated the Competition Law. VAMA wanted to capitalise on its decision by convincing consumers to rush and buy vehicles due to the soaring price. However, Mr Chinh said that to come to a correct conclusion, a consumer association should lodge a complaint against VAMA to the Competition Management Agency under the Ministry of Trade, which will ask automobile manufacturers to consider whether or not to increase prices. He said that the agency could also study and investigate the case itself when interests of the majority of population in society at risk. 

Dinh Thi My Loan, head of the Competition Management Agency, said once businesses with bigger market shares team up, they will affect the healthy competition between other businesses.

According to economic experts, Vietnam’s automobile manufacturing industry has developed very slowly and has not established a healthy competition environment despite being established 10 years ago. To vie for a bigger market share, businesses competed unhealthily without taking into account consumers’ interests. In this environment, it is consumers who suffer great losses.

Consumers responded to the VAMA decision with reservation. Meanwhile, automobile joint venture companies consider the last two months of the lunar calendar year a golden time for selling out their products by launching promotion sales. Toyota is offering a Zace for a lucky customer, Ford is promising a special gift, and Mitsubishi is offering VND10 million worth of petrol for its customers.

Despite promotion sales, purchasing power is much lower than last year. The Nam Trung limited company – an official agent of Vidamco – has only sold very few units although it is offering a discount of US$1,000/unit on average. Toyota and Mercedes have also reported a sharp reduction in sales.