After record growth of more than 77 percent last year, imports of complete-built cars have taken a nosedive following a tax hike.
Figures from the General Statistics Office of Vietnam show that 7,000 cars were imported this month, down 50 percent from December, while their value declined nearly 56 percent to US$175 million.
The number was down 26.6 percent year-on-year and the value, 5.1 percent.
News website VnExpress quoted industry insiders as saying the sharp fall was due to a new tax rule that took effect on January 1, forcing auto importers to increase prices by 2-13 percent.
Under the new rule, luxury tax is calculated on a car’s retail price unlike previously when it was calculated on their cost, insurance freight (CIF) price before the addition of duties and markups.
The new rule, which faced strong resistance from importers, was issued in response to local manufacturers' complaints that the old rule gave importers an unfair advantage since locally made cars were taxed based on retail prices.
Luxury tax on cars range between 15 and 60 percent depending on the number of seats and engine size.
Vietnam imported 125,600 complete-built units last year worth $2.99 billion.