A delegation of America’s “Big Three” car makers on Friday told the Reuters news agency they are seeking to persuade Hanoi to change recently enacted measures that raise taxes and tariffs on their locally assembled vehicles.
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“These actions will lead to a strong contraction in auto sales and production, and not lead to the increased localisation or increased revenue the government is seeking,” a statement from the Automotive Trade Policy Council reportedly said.
The council, which represents Daimler Chrysler, Ford and General Motors, has been in the Vietnam capital city this week for an APEC meeting and met with Vietnam industry and finance officials to voice their concerns, Reuters said.
According to the news agency, Vietnam stirred fresh anger from the industry by saying on Wednesday it was considering a new tariff increase on imported car parts, under which the rates would be raised to 30% from the current 25% from January 1, 2004.
Reuters noted that the government raised tariffs on imported vehicle parts to 25% from 20% on September 1 in a bid to spur car makers to make vehicle parts in the country rather than import them.
Hanoi’s tariff boost under consideration follows previously announced increases in sales taxes and registration fees that have stirred warnings from foreign manufacturers that the higher costs could shut down the small but fast-growing sector, Reuters added.
Stephen Collins, president of the trade council, said the companies hoped instead “to develop an alternative approach” to Vietnam’s vehicle sector, but he did not specify what this might be in the statement, the report said.
Vietnamese car sales by the 11 foreign car makers during the first eight months of this year surged nearly 40% from a year earlier to 22,181 vehicles as buyers scrambled to beat the tax hikes, Reuters said, noting that the country’s foreign joint venture vehicle makers include Toyota, which has the biggest market share in Vietnam at an estimated 26%.
In addition to tariff rises, Hanoi is boosting special consumption taxes that raise the retail price of a standard five-seater car by more than 20% in 2004, and by 40% in 2005, Reuters added.
The average price of a five-seat sedan in the communist country is about 70% more expensive than Europe and 30% more than neighbouring countries, state media said, according to Reuters.
Among the American car makers, for the first eight months of 2003, Vidamco, the GM-Daewoo Vietnamese joint venture, sold the largest number of cars at 3,081 units, with Ford at 2,695 and Mercedes at 1,702, Reuters noted, adding that market leader Toyota sold 6,537 vehicles.
