Gov’t threatens unflinching carmakers with tariff cut

The Ministry of Finance has threatened to cut auto import taxes to reduce car prices as local auto companies have shown no signs of doing so themselves.

Minister Vu Van Ninh issued the warning while speaking to reporters on the sidelines of a National Assembly Standing Committee meeting.

The warning, directed at the Vietnam Automobile Manufacturers’ Association (VAMA), was made after auto companies agreed to rein in soaring car prices at a closed meeting with the ministry on Friday.

Automakers at the meeting asked the government to adopt several measures that would enable them to reduce their prices, but neither party has made any progress so far.

Vietnam agreed to cut auto import tariffs from 80 to 70 percent by 2011 in accordance with the country’s WTO commitment.

But the MOF lowered the tax rate to 70 percent in August, arguing that both the quality and quantity of cars assembled in Vietnam were not high enough to meet local demand.

“Import tariffs on new cars will continue to drop if retail prices remain unchanged,” said Ninh.

The minister hopes that lowering the tariff will encourage foreign carmakers to move into the local market, forcing Vietnamese carmakers to reduce their prices.

Local manufacturers, however, have thrown such cautions to the wind.

Mercedes Vietnam is the only company that has cut its prices so far.

Several small carmakers have said they cannot reduce their prices due to their poor performance over the last two years. Larger companies have said that they need to wait from parent company permission.

A Ford Vietnam representative said it would take time to reduce auto prices in Vietnam. “We need more time to study price reduction,” he said.

“The state should consider lowering the import tariffs on components,” said a representative from another manufacturer.

source: http://www.thanhniennews.com/business/?catid=2&newsid=32217