The three scenarios are as follows 1/ automobile manufacturers will raise the sale prices in accordance with the impact of the tax increases 2/ the car prices will be raised, but the price increases will be lower than the impact of the tax increases; and 3/ the prices will not increase, and even decrease because of low demand.
The scenarios, if they occur, will have different impacts on the market, depending on the price adjustment levels and the action of suppliers.
As for the first scenario, MPV prices (6-9 seaters) will increase sharply, by 12-23%, while cars with less than five seats will either stay unchanged, increase slightly, or decrease slightly.
In the car market in March, MPV models are very hot, as people rush to buy cars before the higher luxury tax rates becomes valid.
However, many observers do not believe that the prices will increase significantly, as the market situation is putting difficulties for manufacturers.
They think that the second scenario is more likely to happen, which means that manufacturers will raise car prices, but the price increases will be lower than the impacts from the tax hike.
A representative from a big automobile joint venture, a member of the Vietnam Automobile Manufacturers’ Association (VAMA), revealed that manufacturers are now still listening to the situation before deciding the most reasonable price adjustments for them. This also explains why up until now, manufacturers still have not made any official announcements about the price adjustments, though the new tax rates have become clear.
Before March, the automobile market was in the gloomiest situation ever. At that time, even the ‘blockbuster’ Innova Toyota was sold at a price lower than the manufacturer’s suggested retail price. The market has become more bustling in March, but this does not mean a market recovery. This is only because people are rushing to buy cars to avoid higher taxes.
Therefore, analysts have every reason to believe that automobile manufacturers will put difficulties for themselves by raising car prices in accordance with the impacts of the tax hike.
The third scenario, which is that the prices would decrease, which is thought to be impractical, is still worth considering. It is because the demand for cars from businesses and people will decrease in the context of economic difficulties. A lot of people will use their money to make investments instead of buying cars.
It is clear that those who have the demand for cars, would have already bought cars in March, and therefore, the demand will not be as high in April. It is expected that the sales will decrease dramatically in April and the next months, if the car prices are overly high.
Meanwhile, if the car prices will be kept unchanged by automobile manufacturers (6-9 seaters) or even decrease slightly, the market will warm up, which will be really a big help for Vietnam’s automobile industry in the current conditions.
