Domestic auto market expected to recover by year-end

The Ministry of Finance (MoF) has sent a dispatch to relevant agencies to collect their feedback on the continuation of the reduced registration fees which supposed to be effective from August 1, 2024 until January 31, 2025.

According to the ministry, domestic automobile manufacturing and assembling enterprises have initially affirmed their role and position in the automobile market and have recorded a significant growth in terms of quantity and quality, contributing billions of dollars to the State budget.

However, auto sales in the first months of 2024 decreased remarkably. According to the Vietnam Automobile Manufacturers Association (VAMA), its members sold 108,309 units in the first five months of this year, down 5% year-on-year.

The MoF said that the proposed reduction this year is essential to stimulate consumption, provide financial support to individuals and businesses and boost the domestic automobile manufacturing and assembly industry in a challenging economic environment. The reduction will help customers save a significant amount of money, it noted.

Since the beginning of this year, many car manufacturers have proactively adjusted selling prices and preferential registration fees not only for domestically assembled cars but also for imported cars. For instance, Hyundai Thanh Cong has adjusted the selling price for its products such as Hyundai Venue, Hyundai Elantra, Hyundai Custin and Hyundai Santa Fe with a reduction from VND20 million to VND100 million (US$783-3,920).

However, consumers are delaying their purchases in anticipation that the Government may continue offering reduced registration fees this year, according to insiders.

Car sales in the market witnessed a strong recovery after the MoF implemented a 50% reduction in registration fee for domestically produced and assembled cars in the second half of 2020 and first half of 2022.

Specifically, there were 189,451 vehicles sold in the second half of 2020, an increase of 76% compared to the first half of the year and 33% year-on-year. Meanwhile, auto sales grew by 36% year-on-year to reach 252,932 units in the first six months of 2022.

A VAMA representative said that the reduction of registration fee is extremely necessary given economic difficulty and a decline in car sales due to the impact of the COVID-19 pandemic. Once it was applied, it will only contribute to supporting the domestic auto industry but also stimulating demand for cars and economic growth.