The used car market will face difficulties if new cars have a 50% reduction in registration fees.

At a press conference yesterday afternoon (May 18), Deputy Minister of Industry and Trade Do Thang Hai affirmed that the registration fee for domestically produced cars will be reduced by 50% and the payment of special consumption tax will be extended. This will be a heavy blow to the used car market, which has been gloomy for a long time.

The Ministry of Industry and Trade believes that continuing to apply the policy of supporting the reduction of registration fees for domestically produced and assembled cars for an appropriate period of time is necessary and consistent with the general spirit, contributing to stimulating consumption of domestically produced and assembled cars, supporting car manufacturing and assembling enterprises and distributors to consume the remaining inventory.

Previously, according to a report by the Vietnam Automobile Manufacturers Association (VAMA), car sales in the entire market in the first 3 months of the year decreased significantly. Major domestic car manufacturers such as Hyundai Thanh Cong and Vinfast saw their sales decrease by more than 31% compared to the same period in 2022, reaching 77,090 vehicles. With the current sharp decline in the car market, car manufacturing and assembling enterprises have launched many incentive and support programs to encourage consumers to buy cars.

The used car market has been gloomy for many months... (Photo: Tung Anh)

Thus, if the decision to reduce 50% of registration fees for new domestically produced cars is approved, it will be like a "doping" dose for the new car market. Many experts predict that the new car market will be much more vibrant in the second half of 2023. Because new car buyers will receive a significant reduction in the amount of money when completing vehicle registration procedures. Specifically, C-class sedan models such as Honda Civic, Mazda3, Kia K3... will receive a reduction of about 50 - 70 million VND in registration fees. This is good news for car manufacturers that hold the largest market share in the Vietnamese market such as Toyota, Hyundai, Mazda, Kia, Honda...

One person’s joy is another person’s sorrow. Used car dealers are worried if new domestically assembled cars will have their registration fees reduced by 50% in the near future.

... The used car market will face more difficulties in the near future if new cars have a 50% reduction in registration fees (Photo: Tung Anh)

Mr. Nguyen Manh Hung, Owner of Hanoi Auto Salon 1, No. 1B Nguyen Van Huyen, Cau Giay, Hanoi shared: “If new cars are reduced by 50% of the registration fee in the near future, it will make the used car market “difficult on top of difficult”. Because from the end of 2022 until now, customers' purchasing power for used cars has decreased sharply, many cars sold have to cut losses but still have no buyers. Currently, our salon mostly sells used cars with a selling price only 100 million VND less than new cars of the same year. If new cars are reduced by 50% of the registration fee, customers will definitely not be foolish enough to choose to buy used cars at used car salons...”

Sharing the same opinion, Mr. Le Nam, a sales staff at a used car showroom on Tran Thai Tong Street, Cau Giay, said: Currently, the Mazda3 1.5L, 2022 model, Luxury version with about 5,000 km of mileage, is priced on the market from 630 - 650 million VND (depending on the newness). While the new car of the same model is priced after deducting incentives from the company, it is only 631 million VND, plus the rolling cost in Hanoi is 109 million VND (registration fee accounts for the majority with 84 million VND).

Thus, the total cost of buying a new Mazda3 for customers in Hanoi is 740 million VND. However, when reducing 50% of the registration fee, customers in Hanoi buying a new Mazda3 will be reduced to less than 700 million VND, while customers in the provinces will receive a higher discount... With new car models, the higher the selling price, the proportional amount of discount customers receive.

Currently, the used car business community in Hanoi is quite worried about the news that new domestically assembled cars will have a 50% reduction in registration fees. Because when this becomes a reality, it will invisibly force the used car market to establish a new price level, any used car showroom that wants to sell cars will have to cut losses, because most of the used cars currently "lying" at the showroom have import prices before the time when new cars will be discounted if the decision to reduce the 50% registration fee is passed...

Rolling cost of new Mazda3 applies to customers in Hanoi

In another development, the used car market in the past 3 months has also faced fierce competition because car manufacturers and new car dealers are launching many promotional programs and giving gifts to increase sales. Specifically, customers buying a new Honda CR-V will receive 120 million VND in registration fees, plus about 30 million VND in additional accessories and a savings maintenance package. Similarly, in April and May, customers buying Hyundai and Toyota cars will also receive 50% of the registration fees from the car manufacturers and dealers, plus 2% VAT, along with many other incentives...

The used car market has been gloomy for the past six months, and is "exhausted" by the pressure of new cars. If the registration fee for new domestically assembled cars continues to be reduced by 50% in the near future, it will put the used car market in a "difficult situation".

Tung Anh