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 Ministries consider loosening requirements on brand-new car imports

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PostSubject: Ministries consider loosening requirements on brand-new car imports   Wed Aug 15, 2012 6:27 pm

The Ministries of Industry and Trade and Finance are considering loosening the requirements enterprises must have to be able to import cars.

Dau tu has quoted its reliable sources as reporting that the strict requirements stipulated in the Circular No. 20, which car dealers complained would kill all of them, may be removed.

The circular stipulates that car importers must show the procuration granted by the automobile manufacturers themselves.

The circular has pushed private car dealers against the wall. A lot of car trading companies have been dragging their miserable existence after the circular issuance by trading second hand cars, or acting as the sales agents of Chinese car brands.

In fact, warning about the death of the car dealers was given after the Ministry of Industry and Trade made public the draft circular for public opinions. However, ignoring the protests by car dealers, the ministry still decided to issue the circular with the strict regulation.

However, it seems that the ministry is now reconsidering its decision. Dau tu newspaper has quoted its sources as saying that there are two important reasons that make the ministry to remove the regulation on the procuration granted by the automobile manufacturers, who own the car brands.

The first reason is that the circular has eliminated a lot of car distributors from the market, because cars only can distributed through the distribution networks built up by automobile manufacturers themselves. This has led to a less competitive market with fewer distributors.

The second reason, which is more important than the first, is the sharp fall of the tax collection to the state budget. Car imports always serve as the biggest tax payers to the state budget, since cars bear some different kinds of tax, including import tax, luxury tax and value added tax.

Commenting about the possibility of relevant ministries considering removing the requirement on procuration, director of an automobile enterprise, said he feels worried about that. The company has got a procuration granted by a South Korean automobile manufacturer.

He said that though having the second biggest sales of less-than-9-seat cars in the market, and having appointed by the manufacturer as its distributor, the enterprise did not dare to make heavy investment to expand the sale network in different areas.

The problem is that it would be very costly to build up the sale network that meets the standards of the manufacturer. Meanwhile, the enterprise has to cut down expenses to compete with private car showrooms which have lower investment costs because they do not have to follow the manufacturers’ common standards.

Besides, the sources of cars for import appointed by foreign automobile manufacturers are limited because of the strict regulations on procedures, prices, bills of sale and vouchers.

“After the circular No. 20 was issued, we have to spend a lot of money to upgrade sales agents. The car prices have been made public in accordance with the manufacturer’s global pricing policy, so that state management agencies can easily control the prices and tax payment. Therefore, we would suffer if the State loosens the requirements on car imports,” he complained.

“If the State’s policies change so regularly, enterprises would not feel secure to deploy their business,” he added.

However, the removal of the regulations would occur, sooner or later, according to local newspapers which quoted their reliable sources.

VnExpress has reported that some days ago, Deputy Prime Minister Hoang Trung Hai agreed to allow enterprises to continue importing cars in accordance with the contracts signed before the day the Circular No. 20 came out without the required procuration.

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Ministries consider loosening requirements on brand-new car imports

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