HANOI (Xinhua): The Vietnamese government is laying the groundwork to cut registration fees levied on locally-made cars by half as an economic slowdown threatens to affect demand for vehicles, Vietnam News reported on Friday (June 9).
The cut, scheduled to be effective for six months starting from July, would reduce the government's budget revenue by up to 9 trillion Vietnamese dong (about US$380 million), according to the Ministry of Finance.
Vietnam's auto industry production and sales dropped sharply in April from March, stoking concerns that the Southeast Asian country's auto market could shrink this year, the Vietnam Automobile Manufacturers Association (VAMA) said in a report.
Retail sales of new vehicles by VAMA member-manufacturers slipped 39 per cent to 50,017 units in the January-April period from a year ago, while sales of imported cars fell 16 per cent to 42,784 units.
Car manufacturers recorded a drop of 19.3 per cent in their production in the first four months of the year, said the Ministry of Industry and Trade in a report, adding that local businesses maintained a quite high inventory accumulation.
Despite the fact that Vietnam's previous cuts in 2020 and 2022 helped revive the auto market as car sales soared dramatically, the Finance Ministry said the upcoming cut would not revive auto sales as much as the last two cuts.
When the global supply chain was disrupted during Covid-19 lockdowns in 2020 on the supply side, the automotive industry was forced to reduce production and delay delivery to consumers, while consumer demand for vehicles exceeded supply.
But currently carmakers are struggling to find buyers as consumers hold off on purchases because of higher borrowing costs and a weakening economy, according to auto dealers.
The cut could also negatively impact the country's free trade commitments since it is only applied to locally-made vehicles. Auto importers have long voiced their concerns over the perceived unfair treatment, said the Ministry of Finance.