Car import tax reduced, will car prices decrease?

Video: Experience the Subaru Outback imported from Japan.

According to Decree No. 73, from March 31, imported cars with HS codes 8703.23.63 and 8703.23.57 will have their import tax reduced from 64% to 50%; imported cars with HS code 8703.24.51 will also be reduced from 45% to 32% to unify the tax rates of these 3 HS codes.

In Vietnam, there are not many car models in the above 3 groups, mainly luxury cars and some large models of popular brands. Thus, Decree 73 does not have a big impact on the Vietnamese automobile market in general because the car models eligible for preferential import tax are quite small in number and mainly from the US, for example Jeep or Mercedes models and a few Lexus models imported from Japan.

The Government's issuance of Decree 73/2025 on March 31 with a reduction in car import tax from 13 - 14% has made many people expect that imported car prices will decrease sharply.

Meanwhile, imported cars from Southeast Asia such as Toyota Camry and Fortuner have enjoyed 0% import tax since 2018 under the ATIGA Agreement. Therefore, this tax reduction does not affect this group of cars. As for cars imported from Japan, the import tax is currently at 45% under CPTPP, but some models with engine capacity over 3 liters, 2-wheel drive such as Toyota Land Cruiser, Lexus GX, LX will enjoy import tax of only 32% under Decree 73.

In theory, when import tax is reduced from 64% to 50%, the price of a car after calculating special consumption tax and VAT can decrease by about 8.6%. This means that a car model priced at 1 billion VND can decrease by 86 million VND if other factors remain unchanged. However, in reality, the price of a car when it reaches consumers depends on many other factors such as exchange rate fluctuations, transportation costs, marketing, and the profits of the company and the dealer.

If the car model and import date are not too far apart, the price of the car may decrease when the import tax is lowered. However, if the car model is an upgraded version or a new generation with more equipment, the price may not decrease, or even increase.

In addition, shipping costs also greatly affect car prices. For example, in the period 2022 - 2023, the conflict between Russia and Ukraine escalated, causing shipping costs from the US to Vietnam to increase 2-3 times. This caused the price of imported cars to increase significantly.

Imported cars are increasingly accounting for a large proportion of the Vietnamese automobile market.

Currently, imported cars are increasingly accounting for a large proportion of the Vietnamese automobile market. If in 2021, imported car sales only reached 130,404 vehicles, by 2024, this number increased to 171,571 vehicles, equivalent to a growth rate of 34%, significantly higher than the 12% increase of domestically assembled cars. This trend mainly comes from the increasing number of foreign car brands entering Vietnam, with the majority of cars being imported completely.

According to statistics from the Customs Department, about 77% of imported cars into Vietnam mainly come from Indonesia and Thailand, two countries with a localization rate of car manufacturing components of over 80% and enjoy 0% import tax.

Although the immediate impact of Decree 73 on imported car prices is not too large, in the long term, many free trade agreements such as CPTPP, EVFTA, UKVFTA will help import taxes on cars from other countries continue to decrease. According to the roadmap, import taxes on completely built-up cars from many markets will decrease to 0% in 2029 - 2030. At that time, imported car prices will have the opportunity to decrease more sharply, creating greater competitiveness compared to domestically assembled cars.

Source: https://khoahocdoisong.vn/thue-nhap-khau-oto-giam-gia-xe-lieu-co-ha-post267255.html