U.S. carmakers seek changes in Vietnam taxes, tariffs
HANOI - A delegation of the Big 3 said Friday it is seeking to persuade Vietnam to change recently enacted measures that raise taxes and tariffs on their locally assembled vehicles.
"These actions will lead to a strong contraction in auto sales and production, and not lead to the increased localization or increased revenue the government is seeking," a statement from the Automotive Trade Policy Council said.
The council, which represents the Chrysler group, Ford Motor Co. and General Motors, has been in the Vietnam capital city this week for an council meeting and met with Vietnam industry and finance officials to voice their concerns.
Stirring fresh anger from the industry, Vietnam said Wednesday that it was considering a new tariff increase on imported car parts, under which the rates would be raised to 30 percent from the 25 percent on Jan. 1.
The government raised tariffs on imported auto parts to 25 percent from 20 percent on Sept. 1 in a bid to spur automakers to make vehicle parts in the country rather than import them.
Hanoi's mulled tariff boost follows previously announced increases in sales taxes and registration fees that have stirred warnings from foreign manufacturers that the higher costs could shut down the small but fast-growing sector.
Stephen Collins, president of the trade council, said the companies hoped instead "to develop an alternative approach" to Vietnam's auto sector, but he did not specify what this might be in the statement.
Domestic car sales by the 11 foreign automakers during the first eight months of this year surged nearly 40 percent from a year earlier to 22,181 vehicles as buyers scrambled to beat the tax increases.
Vietnam's foreign joint venture automakers include Japan's Toyota Motor Corp., which has the biggest market share in Vietnam at an estimated 26 percent.
In addition to tariff rises, Hanoi is boosting special consumption taxes that raise the retail price of a standard five-seat car by more than 20 percent in 2004, and by 40 percent in 2005.
The average price of a five-seat sedan in the communist country is about 70 percent more expensive than Europe and 30 percent more than neighboring countries, state media said.
Among the American carmakers, for the first eight months of 2003, Vidamco, the name of the GM-Daewoo Vietnamese joint venture, sold the largest number of cars at 3,081 units, with Ford at 2,695 and Mercedes at 1,702.
The leader Toyota sold 6,537 vehicles from January to August.
Reuters - October 10, 2003.
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