The Vietnamese government has announced a temporary 50% cut in the registration tax for new locally assembled vehicles to revive the weak domestic vehicle market.

Vehicle sales began to stablise in the second quarter of 2024, after a steep decline in the previous year, as economic growth in the country continued to pick up momentum, driven mainly by strong export and investment growth.

The Vietnamese consumer had been slow to recover from the Covid pandemic, however.

Vehicle sales in the first seven months of 2024 were down by 3% at 140,422 units, according to wholesale data released by the Vietnam Automotive Manufacturers Association (VAMA), driven mainly by a recovery in the commercial vehicle segment.

The registration tax discount would be effective for three months from 1 September until the 30 November. The normal vehicle registration tax varies across the country, starting at 10% in Ho Chi Minh City and rising to 12% in Hanoi.

The tax discount was also designed to help domestic producers compete with the rising number of imports particularly from China.

According to local reports, the discount would reduce state revenue by an estimated VND867bn (US$35m) in the three months.