Vietnam automakers raise prices after tariff hike
HANOI - Several foreign automakers in Vietnam, including dominant assembler Toyota Motor Co , are raising retail
prices following a hike in tariffs on imported auto parts, dealers said on Thursday. "The government's decision to
raise tariffs leaves us with no choice but to follow their action," said an executive at a Toyota dealership in
commercial hub Ho Chi Minh City.
Japan's Toyota Motor Co, which has the biggest share -- an estimated 26 percent -- of Vietnam's auto market,
was the first of the 11 foreign manufacturers in the communist country to raise retail prices by up to 3.3 percent.
The General Tax Bureau hiked tariffs on imported auto parts to 25 percent from 20 percent on September 1 in a
bid to spur automakers to make vehicle parts in the country rather than import them. Vietnam faces a widening
trade gap.
"All automakers will have to increase prices in order to stay in business," said a car dealer for Japan's Suzuki
Motor in Hanoi. Suzuki has advised clients about an increase in prices for all of its models as a result of the tariff
change. But no details were immediately available on the size of the hikes.
Vietnam's foreign joint venture auto makers, which include Germany's Mercedes-Benz, Ford and General
Motors have warned of dire consequences for the fast-growing industry.
Rising disposable incomes have spurred purchases of cars, although motorcycles are still the vehicle of choice for
Vietnam's population of 80 million. Vietnam's lawmakers approved a special consumption tax in May that raises the
retail price of a standard five-seat car by more than 20 percent in 2004, and by 40 percent in 2005.
Domestic car sales by the 11 foreign-invested automakers during the first seven months of this year surged nearly
35 percent from a year earlier to 18,646 vehicles, as buyers scrambled to beat the tax hikes.
Reuters - September 4, 2003
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