Reduction in registration fees a boost for Vietnam auto industry

  • Auto
  • Wednesday, 31 May 2023

Right road: A worker walks past a Mercedes-Benz showroom in Hanoi. Vietnam's auto market is forecast to prosper again, according to a research firm, and the news comes as the Industry and Trade Ministry supports the reduction of automobile registration fees. — AFP

HANOI: The Industry and Trade Ministry’s support for the reduction of automobile registration fees is considered to have a positive effect on the auto industry in the context of a market facing difficulties.

A report by the ministry showed that in the first four months of 2023, automobile production fell by 19.3% compared to the same period last year.

Nguyen Ngoc Thanh, deputy director of the Department of Industry in the Industry and Trade Ministry, said: “Several factors affected the consumption of automotive products, such as the difficulty to access bank capital, high interest rates, high exchange rates and inflation, leading to a high inventory of auto products.”

According to the Vietnam Automobile Manufacturers Association, domestic car production sharply declined in the first four months of this year.

Car sales were also on a downward trend. This has caused concern among manufacturing enterprises.

Sales for April 2023 reached 22,409 vehicles, including 15,748 passenger cars, 6,487 commercial vehicles, and 174 special-purpose vehicles.

All segments recorded sharp declines compared to March 2023, such as passenger cars down 27%, commercial vehicles down 19% and special-purpose vehicles down 51%.

The decline is believed to be due to the cessation of the registration tax reduction policy.

Many domestic automobile firms are also facing fierce competition for market share.

The difficulties are clearly reflected in the results of the first three months for the automobile companies.

Vietnam Engine and Agricultural Machinery Corp (VEA) reported a profit after tax of nearly 1.37 trillion Vietnamese dong (RM268mil) in the first quarter, down 7% over the same period last year.

VEA’s profit mainly came from joint ventures and associates, such as Honda, Toyota and Ford.

Meanwhile, selling and administrative expenses were almost unchanged in the first three months of this year.

Not only manufacturers, but automobile distributors also recorded a dismal first quarter of 2023.

Savico, a distributor of several brands such as Toyota, Ford, Honda, Hyundai, Mitsubishi and Volvo, recorded a profit after tax of only 14.7 billion Vietnamese dong (RM2.88mil), down nearly 85% compared to the same period in 2022 and decreasing more than 11 times compared to the previous quarter.

The amount of inventory in the enterprise exceeded two trillion Vietnamese dong (RM392mil).

Haxaco, which distributes Mercedes-Benz brand cars, recorded a revenue decline of more than 40%, coming in at just less than one trillion Vietnamese dong (RM196mil).

Pre-tax profit in the first quarter was down about 92%. — Viet Nam News/ANN

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