VietNamNet – While importers dither over the value of importing used cars for domestic sale, local auto manufacturers themselves are getting ready to bring used cars into Vietnam.

Importers reconsider used imports

The Ministry of Finance has set new tariffs hoped to be beneficial to domestic automobile manufacturers and prospectively offset the fierce competition anticipated between locally manufactured and imported used cars. The high import tax levels, coupled with the technical barriers, will ensure used cars are no market threat to locally produced vehicles.

Once the new tariff is in place, used car prices on the market will increase. Mr H., a member of www.otosaigon.com said that last month, a friend of his recently made a timely purchase of a Mazda Premacy priced at $22,000.

“At that time, everybody thought that car prices would fall, and it would be difficult to sell used cars. But now he is getting offers of $24,000 for the car,” he said.

Customers gave up hopes of owning a used car when the new tariffs were announced. Meanwhile, the automotive dealers planning to trade used cars have also realised that the market will not prove lucrative due to the high taxes and strict conditions for imports.

Bui Huy Thuc, Director of the Hai Phong Branch of Technoimport, said that the import of used cars does not promise good deals. As a new car importer for many years, Mr Thuc said that importers must hold large capital, and in addition, must cover high expenses before the taxes even kick in.

“We have to follow a lot of complicated procedures to import new cars, and I believe that the procedures for import of used cars will be even more complicated,” he said.

Other car importers in Hai Phong, who once felt highly enthusiastic toward importing used cars, are disappointed with the Ministry of Finance decision.

“It is clear that local auto industry is still being protected, and nobody considers used car import a real opportunity,” a Hai Phong-based car dealer said.

According to Mr H., it would be unprofitable to import standard models, but could still be lucrative to import higher-class models. Mr H. said that purchase of an S-model Mercedes brand new, the taxes may reach $200,000, but when importing used cars, the maximum tax would be $47,000, much cheaper than the brand new cars.

Who will import used cars?

While local car importers are still in two minds about importing used cars, local auto manufacturers initiating plans to import used cars into Vietnam.

Last year, Ford Vietnam began trading used cars produced by the manufacturer in Vietnam, renewing them and then re-selling them. Now the public has become aware that this was the first step in the auto giant’s plan to enter into the used car market.

Other sources said that Toyota is also planning to trade used cars in Vietnam. Meanwhile, Vinamotor, the pride of Vietnam’s auto industry is considering applying for a permit for used car import and trade. If they do, the history of Vietnam automobile industry will turn into a new page.

Will Ford, Toyota and Vinamotor be able to corner the used car market? The answer is ‘why not?” After a decade of strengthening their position in the local market it is possible that they will corner this emergent market as well. Powerful companies like Ford and Toyota, which have diversified sources of used cars and wide distribution networks in Vietnam, can easily afford the capital that gets tied up in importing used cars. This in turn means further cementing of their positions in Vietnam.

(Source: SGTT)