Tariff cut weighed to float car makers

VNBusinessNews - Cuts to import tariffs on automotive parts and accessories have been flagged in a bid to rev up the ailing automobile industry.

The Ministry of Finance said it was considering cutting import tax on engines from 22% to 20%, engine parts from 20 to 15%, transmission boxes from 23 to 20%, transmission box parts from 15 to 10%, and clutches from 25 to 20%.

Industry insiders believed the cuts would help local auto makers to overcome one of the most difficult times in their 20-year history.

They would also help cut retail prices and thus trigger demand, which is the lowest in decades.

Tight credit and the global economic downturn, now entering its 14th month, are keeping customers away from dealerships and preventing potential buyers from getting the vehicle they want.

Carmakers last month responded to one of slowest ever sales months with aggressive incentives meant to lure buyers back into showrooms — but to no avail.

All suffered declining sales, totalling just 3,852 vehicles on the month, a plunge of 68 per cent compared to January last year, the Viet Nam Automobile Manufacturers Association said.

This is the fifth consecutive months of decline since August last year.

Commercial vehicles saw the biggest slump last month with sales down 84 per cent to 1,239 units in January, followed by passenger cars down 40 per cent to 1,258 units. The SUV/MPV segment also saw sales drop 38 per cent during the month to 1,355 units.

Toyota and Honda in late January became the first automakers in Viet Nam to cut retail prices following the reduction in the value-added tax from 10% to 5%, effective this month, bringing retail prices down by 4.4-4.6%, depending on models.

Domestic Kia assembler Truong Hai made some of the deepest cuts of all, dropping prices by 4.2 to 10.7%.

In terms of dollars, Ford cut prices US$1,200-$2,500 while luxury marque Mercedes-Benz lowered prices from $2,000 to $10,000. (VNS)

Source: http://www.vnbusinessnews.com/2009/02/tariff-cut-weighed-to-float-car-makers.html