Auto producers are trying to put last year’s disappointment behind them and are hoping for a prosperous 2013.

Employees of Dong Phong Auto Co Ltd assemble automobile components. Automobile manufacturers are hoping for a brighter year after facing challenges in 2012.

2012 was a challenging year for Vietnam’s automobile industry. The market dropped by more than one-third with just 93,000 units sold.

Most of last year’s decline can be attributed to increases in existing fees and taxes and proposed new levies.

However, since the start of this year, the Government has cancelled plans for personal vehicle fees, and reduced registration fees to 10 percent for new under-ten-seat cars and to 2 percent for secondhand vehicles. This seems to have stirred the market.

Industry insiders agreed that the Government’s lowered lending rates and huge capital injection into the economy would also be decisive for the auto market’s recovery.

Mercedes-Benz Vietnam CEO Michael Behrens told Vietnam Economic Times the demand for luxury cars in the local market still had great potential. More and more successful young Vietnamese people were opting for safe and luxury cars.

Laurent Charpentier, chairman of the Vietnam Automobile Manufacturers Association (VAMA) and General Director of Ford Vietnam, forecast that 2013 would be a difficult year with many challenges for the economy in general and the auto industry in particular.

The slow recovery of the economy plus fees and tax barriers targeting car users would demand greater efforts from manufacturers to prevent sales from falling further.

However, he also noted positive signals in the regional auto market. The demand for automobiles in Vietnam was still very high compared to other countries in the area, due to rising salaries.

Charpentier believed that this year’s sales volume would reach 100,000 units, a year-on-year rise of 8 percent.

By 2018, the auto import tax among ASEAN countries will fall to 0 percent, in line with the ASEAN Free Trade Area (AFTA) policy.

The tax break is imminent, but frequent changes to tax and fee policies by the Government and authorities are discouraging buyers.

According General Director of Audi Vietnam Laurent Genet, Vietnam needed to convey support for the manufacturers if the country wanted to develop the car industry.

Toyota Motor Vietnam’s general director Yoshihisa Maruta said that the biggest problem now lay in the policies. The most important thing to help the industry grow was a stable, clear and consistent management policy.

The Ministry of Industry and Trade (MOIT) had been making efforts to develop the automobile industry, focusing on boosting domestic demand, according to Deputy Minister Tran Tuan Anh.

A stable and transparent roadmap to lower taxes for the post-2018 period when imports from ASEAN would be tax-exempt would be considered carefully to help auto firms formulate production plans.