Fee reduction boosts Vietnam's car market

Under Decree 45/2011/ND-CP, which took effect two days ago, car consumers pay 10 per cent less than before to register a second-hand car. Those who buy a new car can save 5 per cent.

The new car market will not be influenced much by the decree, as the 15 per cent fee is only good news for consumers in the Hanoi market, where it was previously 20 per cent.

In Ho Chi Minh City, the rate was already 15 per cent and in others it was 10 per cent. Moreover, the Hanoi market only accounts for 12-15 per cent of car purchases.

And of course, the decision to own a new car depends on other factors, such as income and convenience of parking, as well as registration fees.

Hoang Quang Tuan, a car buyer, says the fee only plays a modest part in his decision to buy a car.

“Of course, cheaper is better,” he says. “However, buying a car for a reduced registration fee and paying a high parking fee every day is not an intelligent decision.”

Some might argue that they could save 50 million dong (Bt73,380) from waiting to purchase a 1-billion-dong car, but as Hanoian Manh Ha, who owns a Mercedes C200, says: “If someone wants to buy a car and can afford to do so, no fee can stop him. I don’t think the reduced fee will influence the decision to buy a new car.”

On the other hand, the used car market is heating up thanks to the decree, which reduced the registration fee for used cars from 12 per cent to 2 per cent.

Visitors to used car showrooms have increased significantly, according to Tran Hai Duong, salesman in a Hanoi branch of Vietnam Anycar Company, which trades used cars.

Duong says his customers were looking to buy used car models such as the Hyundai Getz, Avante, Kia Morning and Forte, which cost 300 - 600 million dong. 

Similarly, Hoang Nam at Auto Vu That Bay sees not only new clients but also previous clients who come to ask for their car ownership information to be changed.

The decree will positively affect the used car market, insiders predict. Before, due to the high registration fee for used cars, both sellers and buyers often agreed not to change their ownership on paper – making it difficult for authorities charged with regulating vehicle ownership.

But now that the fee to register a used Kia Forte 2011 is 10 million dong instead of 60 million dong, many buyers are paying for ownership papers.

And in the past, customers in big cities often sought out cars in the same city, since owning licence plates from their home city would make it easier to ignore registration procedures. But now used car sellers in places other than Hanoi, Ho Chi Minh City and Da Nang may have an easier time finding customers. Forecasting the trend, many car showrooms in Hanoi hunted for used cars in neighbouring provinces at a cheaper price.

At Bac A showroom in Hanoi’s Long Bien District, seven out of 20 used cars for sale come from other provinces. The showroom owner also said the decree increased the supply of used cars in the city.

Nguyen Thi Cuc, president of the Vietnam Tax Consulting Association, said that if more people registered their cars, the tax income would rise.