Police in the central city of Da Nang have confiscated seven luxury cars with diplomatic license plates that had expired but were still in use.
The cars, including models from Mercedes, Bentley and Lexus, are estimated to worth a total VND30 billion (US$1.4 million).
Police are questioning the owners of the cars.
Da Nang police started inspecting expired diplomatic cars last month in line with a Ministry of Public Security crackdown on cars bearing expired diplomatic license plates.
The cars were registered by diplomats, who enjoy tax exemptions, but later sold illegally to locals when the diplomats left Vietnam.
The police have detected 24 cars whose owners failed to produce ownership papers for their cars.
According to the Ministry of Public Security, some 4,000 cars with diplomatic plates were registered between 1998 and 2009, and thousands were illegally transferred to locals to evade taxes.
The buyers of these cars are supposed to pay the tax that was originally waived for the diplomats.
The ministry has urged them to go to customs offices to pay the tax and to police agencies for registration procedures.