No proper solution to curb car imports found yet

The General Statistics Office (GSO) said 7,300 cars under the mode of complete built units (CBU) were imported in August 2009 worth USD107 million. It was estimated that the same number of cars and import revenue was imported in September. As such, 46,900 CBU cars have been imported in the last nine months of the year, worth USD737 million.

 

The import revenue represents an 11 percent decrease in import revenue in comparison with the same period of the previous year, which may make some experts happy because they think the imports have been controlled.

 

They may also be satisfied that the majority of imports were small cars, which means the policy on discouraging big cars by imposing lower tax on smaller cars has shown its effects. However, analysts have pointed out that the problem of high car imports has been settled. While the import revenue decreased by 11 percent in the first nine months of 2009, the number of cars imported increased by 3.5 percent during the same period.

 

In 2009, not many ‘super-cars’ like the 20 imported Roll Royces worth 20 billion dong each, were imported. However, many models worth 2-5 billion dong have been launched onto the market. This shows the very high demand for cars on the domestic market, which will lead to the high imports of either CBU cars, or car parts for domestic assembling. Currently, 90 percent total car parts must be imported.

 

Mercedes Benz Vietnam, for example, planned to sell 300 E-Class E300 (assembled domestically) and E350 (import product) in the last three months of the year. However, the higher-than-expected demand has prompted the manufacturer to raise the planned sale to 350 cars.

 

The analysts have pointed out that even when policy makers try to impose high taxes on CBU imports, they will not be able to succeed in curbing trade deficit. In case the import tariffs on CBU cars increase, which will make people unable to access import cars, they will shift to purchase domestically assembled cars. The car demand remains very high in Vietnam, despite the high prices, economic downturn and poor infrastructure.

 

Some USD1.1 billion was spent in the last nine months to import car parts for domestic assembling. It is expected that the number of cars sold in 2009 will be no fewer than the 80,000 cars of the previous year.

 

This means that the import revenue of car parts in 2009 will be USD1.5 billion.