Vietnam’s Car Market Surged 55% in 2015

Car sales in Vietnam zoomed 55% to a record 245,000 units last year, Thanh Nien News reports.

Volume in 2015 was buoyed by consumers rushing to beat the impact of a higher luxury tax that began Jan. 1 and hiked prices on imported cars by 2%-13%. The cost of doing business also has risen this year, thanks to a new consumption tax imposed on advertising and vehicle warranties.

The Vietnam Automobile Manufacturers’ Assn. says new-car demand will probably slow to 10% in 2016. But Thanh Nien notes that some industry leaders predict sales could climb as much as 30% because of the country’s strong economy.

More than half the cars sold in Vietnam today are produced locally, mainly by domestic contract assemblers. But that is expected to shift significantly as the country lowers its import tax on vehicles from 50% in 2015 to zero by 2018.

Analysts say the move—prompted by Vietnam’s participation in an ASEAN regional trade agreement— will trigger a surge in low-priced imports. Domestic assemblers, they point out, continue to struggle with a weak local supply base.