According to GDC, in January 2017 alone, Vietnam imported 1,000 cars from India, worth $3.7 million in total. The average import price was $3,700 only, or VND85 million, the price level described as ‘surprisingly low’ and ‘dirt cheap’. The imports from India are mostly Hyundai i10 and i20.
However, Vietnamese cannot buy imports at VND85 million. The amount of money they have to pay will be four or five times higher.
As explained by a car dealer, imports from India are taxed 70 percent. Besides, they are also subject to other kinds of tax, including luxury tax (35 percent for 1.0-1.5L cars) and VAT (10 percent).
Imports also bear many other different kinds of fees, such as ownership registration fee (10-12 percent, or VND233-237 million), the number plate granting fee (VND20 million in Hanoi), registration fees (VND340,000 for the first time), and road maintenance fee (VND130,000 a month).
At present, a Hyundai i10 is sold at VND350-450 million in the market, or five times higher than the factory price.As such, every import product from India would cost VND260 million on average after taxes and fees. Meanwhile, the selling prices will be defined after adding up distribution expenses, profits for distributors, storage fees, and marketing & advertisement costs.
The same is occurring with imports from ASEAN. Though the import tariffs have been cut from 40 percent 30 percent since early 2017, the selling prices are still many times higher than the import prices.
Nguyen Tuan, director of Thien An Phuc, a distributor, said a Toyota Fortuner from Indonesia has the CIF price of $27,500, or VND700 million. However, the selling price could be as high as VND1.3 billion.
“Because of high taxes, Vietnamese have to pay high to own cars,” he explained, adding that the selling price in Vietnam is 2-3 times higher than in other regional countries.
By 2018, when the import tariff goes down to zero percent, the price of one Fortuner would fall by VND290 million thanks to the tariff cut. Many people don’t buy cars at this moment, because they don’t want to waste hundreds of millions of dong on car tax.
Ngo Tri Long, a renowned economist, said people hope the car prices would be decreasing once the tariffs are cut. However, sharp price decreases may not occur, because the car prices not only depend on import tariffs, but also on luxury taxes, fees and pricing strategies followed by car distributors.
“In Vietnam, you’d better not dream of cheap cars,” he said.