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| Consumption tax to slam into car-makers |
| 02-DEC-2008 Intellasia | Vietnam Investment Reviews page 6 |
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| 2 Dec, 2008 - 7:00:00 AM |
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Car sales are expected to grow from now until April 2009 when the new special consumption tax law comes into effect.
Car makers hope sales will be better in the next few months as buyers would spend for fears that new tax levels would push up car prices.
According to the new Law on Special Consumption Tax (SCT), cars with less than nine seats will be classified for tax purposes according to their engine capacities.
Cars with an engine capacity of below 2,000cc will be subject to a 45% SCT level. A tax rate of 50% will be levied on cars with an engine capacity of 2,000-3,000cc and a 60% rate will be stamped on cars with an engine capacity of over 3,000cc.
Industry experts estimate the price of new six to nine seat units will increase by 12-23% when the new tax kicks-off. Sport utility vehicles are expected to see the biggest price hikes. SCT levels on leading sport utility models will increase from the current 30% to 40% and 50%. As a result of tax changes, the price of a Toyota Innova V could increase by US$4,100 compared to the current level.
However, cars with less than five seats and engines of less than 2,000cc will enjoy a slight decrease of 5% that may eventually reduce sale prices.
Imports of luxury models with engines over 3,000cc capacity will be taxed at the new rate of 60% which may drive prices up by 7%.
Truck-makers are concerned over a 5% bump in tax to 10% from January 1, 2009.
Vietnam Automobile Manufacturers Association (VAMA) statistics showed that the total number of vehicles sold by its member companies in October was 5,679 units, a 37% decrease on the same period of 2007.
Despite the downtrend following government tax policies aimed at restricting a massive trade deficit and the global financial crisis, auto-makers are still splurging on showrooms and launching new models in a bid to win over customers.
Experts forecast that from now to the Lunar New Year sales will increase considerably as producers intensify their sales promotions and agents cut commissions.
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