Domestic auto producers face fierce competition as import tax falls Vietnamese car manufacturers will face fierce competition from low-cost cars imported from India and ASEAN when import taxes are sharply cut next year.   Local auto manufacturers face fierce competition  The Vietnam Automobile Manufacturers Association (VAMA) estimated 200,000 vehicles per year would be sold in Vietnam in 2015, half of which were imported.   The situation is worrying local car manufacturers due to the increasing number of imported vehicles.   Imported cars currently face 50% and 70% import duties and excise taxes of from 45% to 60%. Meanwhile, local auto makers currently have to pay a tax of from 15% to 25% for imported components. It is thought that imported vehicles should hardly compete with locally made products, but the reality is the opposite.   Many local auto manufacturers are worried that more imported cars are set to flow into Vietnam next year following the decreased import and excise taxes.   From next January 1, completed vehicles imported from ASEAN countries will benefit from an import tax cut of 10%, bringing the tax down to only 40%.   The Ministry of Finance is mulling over plans to cut excise taxes for mini cars to only 25% to 30% beginning from next July 1 for cars with engines smaller than 1,500 cubic centimetres. Vehicles with engines small than 2,000 CCs would enjoy an excise tax cut by 5%, bringing the tax to 40%.   Due to such tax cuts, prices of complete imported cars with a cylinder capacity of less than 2,000 CCs from ASEAN to Vietnam would decreased by between USD2,500 and USD4,000 per car and from India by between USD1,500 and 2,500 each by the end of 2016.   This would be a dramatic cut with the price cuts of between USD1,000 and USD2,000 each for locally made autos.   After the tax cuts, the prices of completed imported vehicles would fluctuate at around USD20,000, which is comparable to Vietnamese cars.   Vietnam’s auto industry is currently growing at an impressive rate of nearly 60% per year and an annual growth rate of 40% is expected to be maintained for a long time. However, most predictions show that imported vehicles are proving far more attractive than domestically-produced models.   The General Statistics Office (GSO) said that Vietnam spent over USD1.9 billion on importing completed autos in the first eight months of this year, up 132% compared with the same period last year. The figure has already outstripped the 72,000 imported vehicles recorded last year. VietNamNet, dtinews.vn