On February 5 the government amended provisions of Decree 116, which had imposed stringent conditions on the assembly, import and maintenance of automobiles since 2018.

Importers no longer need to produce vehicle type approval certificates (VTAs) issued by authorities in the country of origin. VTAs, which confirm that production samples of a design meet specified performance standards, had been made compulsory by Decree 116.

Besides, imported cars no longer need to undergo rigorous quality tests if they are identical to previously imported vehicles that had been tested in the last 36 months.

Decree 116 had required each individual batch, without exception, to be tested at the time of import.

"Decree 116 was enacted to tighten quality control of imported cars," the owner of a Japanese car dealership said. "But once it has fulfilled its mission to get businesses in line with Vietnam’s quality standards, VTAs and other such certificates become redundant."

Immediately after Decree 116 came into effect on January 1, 2018, car imports plummeted 85 percent year-on-year in the first quarter as importers scrambled to procure the document.

Governments in Vietnam’s major car supplying countries such as Thailand and Indonesia, which had never issued this type of document before, had to start doing so to prevent losing exports.

According to industry insiders, Decree 116 was enacted as non-tariff barrier to protect the domestic industry against a potential flood of car imports as a result of zero tariffs under the ASEAN Free Trade Agreement in 2018.

Businesses quickly adapted to the new regulations, and car imports picked up again in the second half of the year, and have been rising until now. 

Unlike importers of Japanese vehicles, who took a lot of time to get VTAs, German carmakers such as Mercedes, Porsche, Truong Hai (BMW), Volkswagen, and Audi were not affected much since their country already issued the document.

However, stricter customs clearance procedures did slow down luxury car imports from Europe, and dealers had to delay delivery to customers.

"The removal of the VTA requirement and other customs procedures will not affect us too much other than reducing the time it takes to get our cars cleared by customs," a German car dealer said.

The new regulation only applies to import of unused cars, and Decree 116 still applies in full to second-hand imports.

According to the Vietnam Automobile Manufacturers Association (VAMA), 4,281 completely built-up (CBU) cars worth $111 million were imported in January this year, down 35.4 percent year-on-year.

Overall car sales were down 52 percent from the previous month and 53 percent year-on-year to 15,787 units.