According to media reports, the Vietnamese government has announced a temporary 50% reduction in registration taxes for domestically assembled new cars to revive the country's sluggish automotive market. It is estimated that this move will reduce Vietnam's national tax revenue by approximately VND 867 billion (around USD 35 million) over three months.
The tax reduction will take effect from September 1 and last until November 30. However, registration taxes vary across different regions in Vietnam. For instance, Ho Chi Minh City has a starting rate of 10%, while Hanoi's rate is around 12%.
From December 1, cars produced and assembled in Vietnam will once again be subject to the original registration tax rates. The tax relief is intended to help domestically produced vehicles compete with the growing number of imported cars, especially those from China.
It's worth noting that this is not the first time the Vietnamese government has implemented such measures. Last year, a similar decision was made to halve registration taxes for domestically produced cars over a six-month period.
However, SSI Research, a market research agency, believes that the car industry's revenue in Vietnam will still be impacted in the third quarter as consumers delay their purchases in anticipation of incentives. Nonetheless, a surge in accumulated demand is expected to lead to increased automotive revenues in the fourth quarter.
Vietnam's economy continues to accelerate, driven by robust export and investment growth. Against this backdrop, Vietnam's automotive sales, which had experienced a sharp decline the previous year, began to stabilize in the second quarter of this year.
According to wholesale data released by the Vietnam Automobile Manufacturers' Association (VAMA), automotive sales in Vietnam saw a year-on-year increase of 17% and a month-on-month rise of 9% in July, thanks to significant discounts offered by car dealers.
