Hanoi (VNS/VNA) - With a continuous year-on-year decline in sales thisyear, the domestic auto industry is unlikely to achieve the 10 percent growthpredicted by the Vietnam Automobile Manufacturers’ Association (VAMA).

The 21,870 autos sold in October marked a year-on-year drop of 22 percent.

In the January-October period, a total of 204,999 automobile units were sold,down nine percent year-on-year, according to a VAMA report.

The sales of passenger cars decreased by 10 percent, commercial vehicles by sixpercent and special-use vehicles (cranes, canal diggers, street-cleaningtrucks, waste trucks, passenger bus at airports, lift trucks in warehouses andsmall cars serving golf courses) by 18 percent during the period.

Although auto businesses have engaged in aggressive marketing to boost year-endsales, offering discounts and promotions from few dozens to hundreds ofmillions of dong on ordinary cars to luxury cars, they have not achievedexpected results.

The Truong Hai Automobile Joint Stock Co (Thaco) offered price reductions of 5million VND (219 USD) to 26 million VND in October for its Morning, Cerato andSorento models.

Meanwhile, Toyota Motor Vietnam supported buyers with registration fees reductionsof 30 million VND for Vios, 15 million VND for Innova and 50 million VND forCamry 2017.

Mitsubishi Vietnam also launched a discount of 214 million VND for the SUVPajero, bringing its retail price down from 2.12 billion VND to around 1.9billion VND.

Apart from its poorly selling models, Huyndai Thanh Cong announced a specialpromotional programme offering a discount of 230 million VND for itsbestselling new-version model SantaFe, which brought the price down to 898million VND. 

In its luxury car segment, Mercedes-Benz Vietnam also offered a 50 million VND registrationfee discount and three free maintenance passes for all cars that the company isproducing and distributing in the Vietnamese market.

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Despite all the price reductions and promotions, many consumers were stillwaiting for a further reduction or until early 2018, hoping to buy cheapervehicles once the import tax rate for completely built units drop from 30 percentto zero percent in the Southeast Asian (ASEAN) region.

However, such hopes were dashed last month when the Government issued Decree116/2017, effective from the day of signing, introducing several strictregulations for locally-assembled automobile businesses as well as importers.

These regulations will not only make it difficult for small businesses toimport autos, but also for official distributors in Vietnam and localassemblers.

VAMA has sent a petition to the Prime Minister expressing concern over some ofthe new regulations in the decree that relate to automobile manufacturing,assembly and importing enterprises.

For example, the decree requires that when conducting inspections and tests,auto importers must provide quality management bodies with papers includingcopies of quality certificates issued by foreign authorised agencies ororganisations for imported cars. VAMA has said that many countries do not havesuch certification, making it difficult for importers to do business.

However, the Ministry of Industry and Trade has said that the new decree willhelp domestic enterprises and foreign investment companies to compete morefairly, ensuring the interests of consumers.

Another regulation in the decree requires domestic auto assemblers to have anauto testing track with a minimum length of 800m, including flat, rocky, ruggedand rippled, as well as sloping, wet and curved surfaces.

VAMA said it was difficult for its members to meet this requirement becausethere was not enough space to build or expand the testing track. Furthermore,the rent for such space would be very costly.

Auto importers, meanwhile, are required to have authorised certification torecall products, but small and medium enterprises cannot meet this requirementbecause they always buy vehicles through middlemen. In addition, for batches ofcars imported by small businesses or official distributor, management bodieswill check each lot and model representing the type of cars in the batch, thusincreasing expenses for the importers.

Nguyen Tuan, the director of Thien Phuc An, an auto importer, said the testwould be very expensive, costing some 100 million VND for each batch, not tomention the two months or so it would take, which would lead to many otherexpenses, forcing businesses to sell at higher prices.

Tuan said the conditions stipulated in the decree made it very difficult forsmall and medium enterprises and non-authorised car dealers (who buy carsfrom the automakers in foreign countries and import them into Vietnam).  Withthis decree, the domestic car market will remain wholly controlled by jointventures and some official distributors in Vietnam, and there will not be muchcompetition that would benefit end users, he added. -VNA