Brian Jeffrey
The Ministry of Finance has proposed cutting the vehicle registration tax by 50 percent for six months, starting from August 1, 2024, to January 31, 2025, for locally assembled cars.
While the decision is pending final approval and requires consensus from various agencies, the potential tax reduction has already had a significant impact on the automobile market.
Nguyen Lan Phuong, residing in Hanoi, postponed purchasing a THACO CUV earlier to await the official announcement on the tax cut, hoping to benefit from the lower prices following the decision.
She explained, “The car I wanted to buy was almost VND700 million. With the proposed 50 percent tax cut, I could save VND40 million, which is worth the wait.”
Impatient due to the absence of an official decision, Phuong faces pressure from car dealers urging her to make a purchase decision promptly.
Car dealers are offering enticing incentives for selected imported B-size crossover models, including a 50 percent registration tax reduction, discounts, and spare parts, influencing Phuong’s decision-making process.
On the other hand, Do Minh Thanh from Hanoi is considering waiting for the government’s approval on the tax cut to save an estimated VND60 million on a domestically assembled SUV purchase.
Auto manufacturers and sales agents are also eagerly anticipating this new policy.
Luong Thanh Tuan from Honda My Dinh in Hanoi noted a decline in sales following the news about the tax cut. If approved, the tax reduction could lead to significant savings for buyers of Honda CR-V and Honda City models.
Furthermore, Honda has recently offered price reductions on these models, providing buyers with advantages from both the government policy and manufacturer promotions.
Given the uncertainty surrounding the new tax policy, many car buyers have postponed deliveries, while some have opted to purchase imported cars and existing inventory to secure their desired vehicle and incentives.
Analysts highlight that amid inflation, exchange rate fluctuations, and gold price increases, the market has seen reduced consumer spending and canceled car purchases, necessitating the registration tax cut to stimulate demand.
By the end of May 2024, a total of 127,643 automobiles were sold by VAMA member companies and the Hyundai Thanh Cong joint venture, reflecting a significant decrease compared to the previous six months and the same period in 2023.
