Used car business in trouble
Auto industry faces multiple challenges
By Quoc Hung and Thoa Nguyen - The Saigon Times Daily
HCMC/HANOI – The economic woes coupled with hiccups in polices on taxes and fees not only impact traders of new autos but also hit secondhand car dealers.
|A passerby walks past a used car showroom on An Duong Vuong Street, while a showroom attendant sits idly nearby waiting for customers - Photo: Kinh Luan |
Old car buyers can enjoy cheaper prices and avoid the high registration fees, currently at 15% in HCMC and 20% in Hanoi. However, multiple used car outlets in HCMC are now burdened with high volumes of unsold products, which choke off the capital flow and bring huge losses to businesses.
Tran Duy Phu, director of An Phu Gia Import-Export Trading Co., owner of An Phu Gia Auto Store, said his company used to sell an average 30 vehicles each month, but now the sales volume has dropped to three. As such, he has cut the number of sales agents from five to two.
Sharing his 20 years’ experience in the auto market, Phu said used car traders often bought old cars and immediately sold them to customers in a few days. There was never a secondhand car that remained unsold in months or even over a year like now, he stressed.
As new cars are facing sluggish consumption, local automakers have launched promotion programs to lure buyers, making it more difficult for old car traders.
Moreover, personal vehicle restriction fee and downtown entrance fee, though not approved yet, make customers hesitant to buy cars. This is the reason why there are currently more sellers than buyers in the auto market.
Notably, the demand for selling cars of businesses tends to increase. Used car traders explained enterprises are forced to sell cars to settle debts and pay their employees.
Not only small dealers, sales agents of large auto firms are also struggling with poor sales. An agent of Ford Vietnam that trades secondhand vehicles in HCMC said the used car market had plunged by 50-60% since the year’s beginning.
* The Vietnam auto industry is facing multiple challenges on its development path while the competitiveness of this industry is not strong enough, heard a seminar on removing difficulties and developing the Vietnam auto market in 2012.
The seminar was a feature of the 2012 AutoExpo that took place in Hanoi last weekend.
Experts at the event pinpointed the greatest challenge for the automotive industry of Vietnam is the schedule for tax cuts under the Agreement on the Common Effective Preferential Tariff (CEPT) for the ASEAN Free Trade Area (AFTA). In particular, auto import tax rate will be slashed to 50% in 2014 and 0% in 2018.
In addition, burdened with many costs, locally assembled cars can hardly compete with imported complete built-up vehicles from ASEAN countries. It is yet to mention the internal shortcomings of the local auto industry and its supporting industries.
Furthermore, participants in the seminar shared the view that the biggest obstacle for the development of Vietnam’s auto industry is policy bottleneck.
“We have too many policies that are inconsistent, or even inadequate. The policy is to develop the auto industry to boost industrialization and modernization, yet special consumption tax is imposed, restricting consumption,” said Do Huu Hao, chairman of the Vietnam Society of Automotive Engineers (VSAE).