The Vietnam Automobile Manufacturers Association (VAMA) yesterday announced that retail prices for locally-assembled vehicles will go up next year in accordance with a proposed tax amendment.

The amendment on the Special Consumption Tax (SCT), expected to be approved by the National Congress later this month, stipulates a 50% tax on 2-5 seat vehicles (up by 10 percent), a 30% tax on 615 seat vehicles (an increase of 5%) and a 15% tax on 16-23 seat vehicles (up by 2.5%).

While the association did emphatically state the exact industry price increases, market-watchers said they would reflect the SCT hike.

The association said it hoped this confirmation would put an end to rumours that retail prices for locallyassembled vehicles would, be reduced next year in line with a lowering of import duties and SCT.

The rumours have caused many customers to hesitate or delay buying cars. "This caused a negative sales impact on all VAMA members, and lowered national income from the State budget,"the association said in a statement.

The VAMA said its 11 members sold just 3,358 vehicles last month, down by 69% from 2004 and by 78% over 2003.

The organisation yesterday re-affirmed that its products, imported as unassembled `complete knock down units and pieced together locally, still have a competitive price advantage over imported pre-assembled vehicles, even though SCT tax rates for both kinds would be equalised next year under the proposed amendment.

It said the price of imported pre-assembled vehicles would remain much higher than that of their locally-assembled counterparts because of the remaining gap in import duties. Import taxes for unassembled vehicles range between 15 and 25%, while readymade imports face a 100% surcharge.

According to the General Department of Customs, the nation imported more than 15,000 finished automobiles in the first nine months of this year, the largest tally on record.

Most of them were luxury sedans and,sport-utility vehicles including Lexus, Porsche, BMW and Audi, which competed with locallyassembled Mercedes-Benz, Toyota and Ford automobiles.

Vietnam has around 200 firms involved in activities related to manufacturing, assembling and repairing automobiles, with 90 specialising in auto production and assembly.

The country has about 12.7 million motor vehicles on the roads, 12 million of which are motorcycles. (VNS)