Dealers are seeing growth in the local car market, especially for small cars as tax hikes will take effect from July 1.

Small cars are getting more attention and will have the fastest growth. Audi Vietnam reported that the sales in the first half of the year increased by 35% compared to previous year. BMWs sale increased by 40% in the first five months. May and June saw sales double.

Mercedes-Benz Vietnam also reported that their sales in May tripled previous months while Lexus Vietnam reported 92% over the first five months of this year compared to the same period in 2015.

Big auto shows held

Many people are rushing to buy cars now as tax rates will increase from July. Taxes on cars with 1.5 to 2.5 litre engines will remain at 45-50%, while those between 2.5-three litres will increase from 50% to 55% and those between three to four litres will increase to 90%.

However, a dealer in Hanoi said the number of customers has increased despite the tax hike because of increasing number of rich people in Vietnam. They also claimed that orders for some cars would only be met at the end of this year.

Luxury cars with engines ranging from 2.5 to 3 litres are selling well as the tax increase wasn’t sufficient to deter well-off families. A VND1bn car will increase in price by just VND200m. Customers who previously showed interest in cars with engines over three litres are now considering smaller cars.

Manufacturers have also focused more on smaller cars. BMW, Mercedes-Benz and Audi in in Hanoi have promoted the sale of less than 3-litre cars.

As SUVs have seen good growth worldwide, some manufacturers have also shift focus on the SUVs and crossovers for family trips. This is proved by the sales of Audi Q series, BMW X series and the Mercedes-Benz GL-Class.