New vehicle sales in Vietnam fell by over 37% year on year in April to 6,004 units, from 9,558 units a year earlier, according to the Vietnam Automobile Manufacturers’ Association (VAMA).

VAMA member data showed passenger car sales falling 45% to 1,746 units in April, SUV and MPV sales down 43% to 1,097 units and commercial vehicles 32% lower at 3,061 units.

The government increased vehicle registration taxes from 10% to 15-20% at the beginning of the year which resulted in some vehicle sales being brought forward to last year.

Retail interest rates remain stubbornly high at around 20% per annum as the central bank tries to contain inflation. Banks also impose very strict lending criteria on borrowers. This makes Vietnam one of the most expensive car markets in the world despite the low average incomes.

Cumulative vehicle sales for the first four months of 2012 fell 36% to 24,102 units, from 37,819 units a year earlier. Passenger car sales were down 42% year to date at 7,403 units while SUV and MPV sales were 48% lower, at 4,432 units, and commercial vehicles 29% lower at 11,778 units.

The association also put the continued weakness in the market down to proposals by the government to increase vehicle usage taxes in the form of an annual levy.