The Government has asked the finance and industry ministries to consider reducing car registration fee and extend the payment schedule for special consumption taxes on domestically assembled vehicles.

The ministries will submit a report on the two newly proposed policies to the Prime Minister before March 20.

The request was made as automakers are warning of a slump in the automobile market this year due to low demand and high interest rates.

Insiders have said that the local automobile’s prospects this year might be as gloomy as the Covid period.

Experts have predicted that total vehicle sales this year are unlikely to reach last year’s figure of half a million units.

Industry associations and localities have recently been asking the Government to extend the payment schedule for special consumption taxes, and to halve registration fees on domestically assembled vehicles in order to stimulate demand.

The Vietnam Automobile Manufacturers Association (VAMA) said credit tightening and rising interest rates have diminished market liquidity, and automobile companies are struggling to cope with high inventories.

VAMA said its members reported a decline in sales four months in a row starting last October. Only 17,314 vehicles were sold in January, down 51% from December.

The Vietnam Association of Mechanical Industries has reported that the drop in vehicle consumption has led to a decrease in production orders for supporting industries like mechanics, tools and parts.

During the Covid pandemic, Vietnam halved registration fees on domestically assembled vehicles twice, first in mid-2020 and then again in late-2021. Each reduction period lasted six months.

In the first half of 2020, over 102,900 domestically assembled vehicles were registered. The figure then doubled in the second half of the year.

Source: VnExpress International