Vietnam’s automobile market has passed more than half of its journey with many headwinds. However, automakers predict that the automobile market will improve in the last months of the year as rebounding demand for car purchases and the launch of many new car models will cushion the decline in sales in 2023.
There are many reasons for a sharp decline in sales in the automobile market. Specifically, Vietnamese consumers have become more mindful of their spending habits amidst a global price crisis and widespread inflation across many countries in the world. Meanwhile, car loan interest rates remain high, while most buyers have to borrow to buy new cars.
VinFast, a major homegrown electric vehicle maker in Vietnam, delivered 9,535 electric vehicles and 10,182 e-scooters in the second quarter of 2023.
In addition to its current electric vehicle portfolio, Vinfast has announced an upcoming mini electric car that will compete with the Wuling Hongguang Mini EV from China’s TMT that is coming to Vietnam in late 2023.
Mercedes – Benz Vietnam launched its first luxury electric sedan EQS in Vietnam in late 2022. In 2023, Mercedes – Benz will bring 3 more all-electric SUV models to Vietnam.
Other automotive brands, especially those in the luxury car segment like BMW, Porsche, Audi, Volvo, have introduced their first electric cars in Vietnam, and shared their strategy to launch their electric car portfolio in Vietnam in the near future.
The 50% registration tax reduction policy for domestically manufactured and assembled automobiles is effective from July 1, 2023, to the end of 2023, according to the Government’s Decree No. 41/2023/ND-CP on the registration fee for domestically produced and assembled cars. This is the third time in the past 3 years that the preferential 50% registration tax reduction policy for domestically assembled and produced cars has been issued.
Amidst the continuous decline in purchasing power from the beginning of 2023 until now, the policy is expected to stimulate demand and improve consumer confidence for car purchases while supporting automobile manufacturing and trading enterprises to regain sales growth momentum.
The Government has issued Decree No. 36/2023/ND-CP extending the deadline for paying excise tax for domestically manufactured or assembled cars. Specifically, the deadline for paying the excise tax arising in the tax period of June, July, August, and September is November 20, 2023. This Decree takes effect from June 21, 2023, until year-end.
After the extension period according to this Decree, the payment of excise tax shall comply with current regulations. Since 2020, this is the fourth time that the special consumption tax on domestically manufactured and assembled cars has been extended to support and restore production and business due to the impact of the COVID-19 pandemic.
With a population of 100 million people and ample room for growth in the coming years, Vietnam continues to draw the attention of foreign investors in the automobile industry.
According to Mr. Genet, local production and assembly clearly benefit from the deferred special consumption tax payments. The arrival of new brands assembling locally, together with the launch of new models, will support production by the end of 2023 thanks to the initial stock built-up at launch. The trend will also benefit imports, as new brands need to extend their range faster by offering CBU models.
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