Thursday,  Oct 18, 2018,18:31 (GMT+7) 0 0
Ground to a dead halt
Son Nguyen
Saturday,  Feb 3, 2018,00:03 (GMT+7)

Ground to a dead halt

Son Nguyen

Auto makers and traders have since late last year prepared themselves for a booming 2018, while consumers have dreamed and patiently waited for the right time in the New Year to buy a car at a much lower price as the tariff was due to plunge to zero from the previous 30% for autos imported from ASEAN countries. The preparations are in vain, and the dreams are shattered, as new policies have changed the market upside down, stonewalling all channels. And the brake is firmly on.

One month has passed since the tariff reduction scheme took effect, but not a single ASEAN-made vehicle has found its way into the domestic market, putting automakers, traders and consumers all under tenterhooks. The lamentable situation is all the more chaotic as now is usually the peak season for auto sales, as many consumers want to have new cars for use during the Lunar New Year holiday. Auto imports from ASEAN countries are now virtually impossible owing to Government Decree 116, which is designed with a noble cause to protect the interests of consumers. Sarcastically, it does greater harm than good.

The decree, issued last October and taking effect on January 1, contains numerous conditions for importing completely-built-up vehicles from ASEAN. Apart from criteria demanded of traders, such as facilities for maintenance and the test-driving courses, the two most problematic conditions specified in the decree are that importers must obtain vehicle type approval (VTA) certificates from exporting countries, and that each batch of imported vehicles will have one thoroughly inspected by the vehicle registry agency. These two conditions, according to local media, have erected insurmountable barriers for traders.

Dinh Ngoc Thang, deputy director of the HCMC Customs Department, says in Phap Luat newspaper that not a single car has been imported into HCMC in the past month, in stark contrast to the situation in previous years when January would see an influx of vehicle imports. Thang points the finger at Decree 116.

VTA certificates, say traders, are not available in most countries, so importers cannot secure such documents. Even in some countries where such certificates are available, they are not issued to vehicles for export.

Pham Anh Tuan, a senior executive at Toyota Vietnam, explains in the news site zing.vn that in some countries, VTA certificates are only issued for locally-consumed vehicles, not for export shipments. In ASEAN countries where vehicles have the steering wheel on the right side, VTA certificates if obtainable will not be accepted by Vietnam Registry, says the news site Dan Tri.

“Assumed that VTA certificates can be obtained, technical inspections of vehicles will take some 70 days before they can be cleared by the customs, and also assumed that each large-scale trader imports one or two car models a month, it will take around 400 days for completing inspections of all such models,” an auto trader is quoted as saying in Dan Tri.

Faced with the preventively-high barriers, many global automakers have stopped manufacturing vehicles for the Vietnamese market. Toyota Motor Corp. announced on Nikkei that it has completely halted production of vehicles for the Vietnamese market, according to zing.vn, while Nguoi Lao Dong reports that many others including Honda, Ford, Mitsubishi and Suzuki have also suspended auto shipments to Vietnam pending a clarification of new regulations.

And the auto market enters a cycle of chaotic trade.

As numerous consumers hunt for cars, prices have skyrocketed instead of going down in line with the falling import tariff, and traders largely are not happy since they do not have vehicles to sell. Honda Vietnam, for example, has had to return deposits to some 2,000 car buyers as it cannot place orders with Honda Thailand, a situation that couldn’t be worse, says Dan Tri. This is also seen at many other auto traders.

Toyota Fortuner 2017, which is fairly popular with local consumers, is no longer available, and its price has also surged. Even a second-hand auto of this make having been in use for six months to one year is now offered at VND1.1 billion a unit compared to the initial price tag of VND981 million for a brand-new one months ago, says Nguoi Lao Dong.

With the scarcity of vehicles, many customers accept high prices, all to no avail, according to the news site VnEconomy. That situation leaves many of them frustrated.

“I was wrong for not buying a car last year, in expectation of a lower price this year. Now I am willing to pay a high margin for a car but traders simply shake their head,” VnEconomy quotes a man in Hanoi City’s Thanh Tri District. The news site says that a sense of frustration is widespread among consumers as a few months back most of them were waiting for this day. That wait-and-see attitude last year forced auto sales down compared to 2016.

The picture for auto assemblers, though a bit brighter, is also gloomy. Many of them now do not have sufficient parts to assemble vehicles pending changes to regulations to enjoy zero tariff for importing such parts. Regulations in Decree 116, says the automakers, are also troublesome and time-consuming for implementation.

Sai Gon Giai Phong predicts that the volume of locally-assembled autos will increase strongly in the next month or so, but the outlook for the auto import segment is still so dismal. Many consumers who prefer imported vehicles have placed deposits with traders, but they are told to wait at least five or six more months before the barriers can hopefully be lowered or cleared.

Given the dead halt in auto importation, the Vietnam Automobile Manufacturers Association, or VAMA, has four times written to the Prime Minister and relevant ministries petitioning that the implementation of Decree 116 be delayed for at least six months so that traders can get accustomed to the new business environment.

With predictions of auto traders, the market will still be chaotic in the coming time, and the dream of many local consumers to have an affordable car remains distant, although policies including Decree 116 are meant to protect their interests and benefits. It is the high time relevant ministries give explanations to businesses and consumers on why a policy is unworkable from the start.

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