An undated photo of a motor show in Vietnam. Photo: Thai Nguyen/Thanh Nien
Vietnam's auto imports declined by 21 percent year-on-year to US$1.18 billion worth in the first half of the year following tax changes that increased their prices.
Around 49,000 vehicles were imported, down 11 percent, news website VnExpress reported Wednesday, citing the General Statistics Office of Vietnam.
From the beginning of this year luxury tax is calculated on an imported car’s retail price unlike previously when it was calculated on their cost, insurance freight (CIF) price before the addition of duties and markups.
Many importers who strongly opposed the rule estimated it could drive prices by 10-20 percent.
The new rule came in response to local manufacturers' complaints that the old rule gave importers an unfair advantage since locally made cars are taxed on their retail prices.
Industry insiders forecast imports to remain slow for the rest of the year since, besides, luxury tax on cars with engines of more than three liters have also risen sharply to 90-150 percent since July 1.
Many expect the new rate to increase car prices by at least 70 percent.
Cars with engines of 2.5-3 liters have also seen an increase of 5 percentage points in the luxury tax rate to 55 percent.
But the rates on cars with engines of 1.5-2.5 liters remain at 45-50 percent, while the smallest cars are now taxed 40 percent compared to 45 percent earlier.