>> Vietnamese auto industry addicted to imports

The Vietnamese Ministry of Industry and Trade has issued more stringent requirements for car importers, with the intention of raising the quality of imported vehicles.

Customers looking at a new car model in Vietnam.

Under the ministry’s Circular 20, importers will be compelled to complete more procedures when importing vehicles with less than nine seats, including a letter of attorney from producers. In addition, importers will also have to show agent contracts notarised by Vietnamese diplomatic offices overseas and auto maintenance certificates granted by the Ministry of Transport.

The circular, which takes effect from June 26, will ensure that only vehicles with clear points of origin will be available for sale, improving consumer rights.

Currently, it is common for independent car showrooms to buy vehicles from abroad and then import them into Vietnam. These showrooms often fail to provide technical assistance or post-sale services to customers. The purchase of replacement spare parts or provision of maintenance services totally depends on the capacity and goodwill of the showrooms, as there are currently no legal requirements for them to provide these services to their customers.

Vehicle importers face closure

However, the circular faces strong opposition from independent car dealers and importers.

Le Thanh Ha, a representative from a vehicle import company in Lo Duc Street, Hanoi, said, "This circular will benefit domestic auto assemblers, but could affect the survival of over 4,000 local car importers. We’ll soon not be allowed to import vehicles.”

Many firms in Hanoi’s Le Van Luong and Lang Ha streets which specialise in importing South Korean or Japanese cars produced in Taiwan or the Middle East have complained that these new regulations may put them out of business.

According to a representative from the CP 216 Company in Tran Khat Chan Street, “This is unfair for unofficial importers. Why, when we can sell imported vehicles at lower prices, should we not be permitted to continue our business?”

A number of importers are concerned that large consignments of vehicles due to enter Vietnam by sea may not arrive before the circular takes effect.

If these consignments fail to dock before June 26, importers are at a loss as to what will happen, as no guidance has been offered, and they will still be liable for the interest on the loans they have taken out.

The circular has also been criticised for potentially leading to a monopoly among authorised dealerships in the Vietnamese auto market. Companies that have not been recognised by Vietnamese diplomatic offices overseas or not having received auto maintenance certificates granted by the Ministry of Transport will no longer be allowed to imports vehicles.

Consumers will also find that prices could rise if only authorised dealers are allowed to trade vehicles. A 2011 Prado Land Cruiser distributed by Toyota Vietnam is currently sold at VND1.92 billion (around US$92,000), but it costs just US$80-90,000 at unauthorised car showrooms.