3,700 billion is the reduction of the State's revenue due to the application of a 50% discount on registration fee for domestically assembled cars in the last six months of 2020. In exchange, consumers have a chance to buy a cheaper car. More importantly, domestic automobile enterprises have escaped difficulties and maintained their pace of production.

In the first six months of the year, the Vietnamese car market faced difficulties
when consumption fell sharply. 

People reduce the cost of buying cars

On June 28, 2020, the Government issued Decree No. 70/2020/ND-CP regulating the registration fee for domestically manufactured and assembled automobiles until December 31, 2020. Accordingly, the registration fee for domestically manufactured and assembled cars is equal to 50% of the rate specified in Decree No. 20/2019/ND-CP dated February 21, 2020 on registration fees.

Registration fee is a collection directly paid to consumers, paid by businesses on behalf of the business, so this policy directly supports car buyers, the reduction is in fact very significant.

In the small segment, with car prices from VND400 million to VND700 million, buyers can save VND20-30 million. This is considered a small amount for first-time car buyers with an average income. Especially for individual business households, transportation businesses that buy to transport passengers (taxi, Grab), this is a great support to the business in the context of the Covid-19.

In the segment of luxury cars with prices of several billion VND, the preferential amount is up to several hundred million VND, convincing people to buy cars during the difficult economic period.

Although the policy only applies to domestically manufactured vehicles, in order to compete, many imported models also assist buyers to reduce the registration fee of 50%, even some models have a 100% discount. Registration fee applies for customers to buy cars such as Honda CR-V, or Volkswagen models.

Not only that, companies are racing to apply promotional policies, giving gifts, and providing discounts for customers. As a result, the price level of cars in Vietnam has mostly been adjusted to decrease. In general, consumers have a lot of benefits when buying cars in this period.

Save the car manufacturing industry

In the first six months of 2020, due to the impact of the Covid-19 pandemic and economic difficulties, consumers limit shopping, so the amount of cars consumed on the market plummets, even at times "freezing".

The quantity of product inventories of domestic automobile manufacturing enterprises increased rapidly, businesses faced difficulties, many enterprises faced the danger of suspending production and workers losing jobs.

The Government's policy of 50% reduction in registration
fee has supported domestic production.

The 50% reduction in registration fees partly has a direct impact on the interests of customers, and has a positive impact on market sentiment, so the purchasing power has increased rapidly from August, September and October, reaching 33,254 vehicles sold, up 22% from the previous month (up 15% over the same period last year, considered a record number in 2020), domestically reached 20,498 vehicles (up 25% over the same period last year).

By the end of 2020, business results from large automobile manufacturers will clearly show the effective impact from this preferential policy.

As an enterprise currently producing and assembling 100% of Hyundai branded cars (including three class A, B and C passenger cars, three crossovers and commercial vehicles), TC Motor is benefiting from this preferential policy.

With 81,368 vehicles sold in 2020, TC Motor has had spectacular business results in the difficult economic situation, making Hyundai a rare brand in the automobile industry with positive growth (2.2% compared to 2019 with 79,568 cars).

The second largest domestic enterprise is VinFast. Only three models are produced and launched in Vietnam: Fadil, Lux A 2.0 and Lux ​​SA2.0. But in 2020, this Vietnamese brand has set a new record for the number of cars sold.

For example, in the last month of the year, 4,503 VinFast cars were delivered to customers (2,472 Fadil cars, 1,115 Lux A2.0 cars and 916 Lux SA2.0 cars). For the whole year, VinFast sold a total of 29,485 cars (18,016 Fadil cars, 6,013 Lux A2.0 cars and 5,456 Lux SA2.0 cars)

According to a representative of VinFast, the great motivation for VinFast to make a strong breakthrough in 2020, especially in the last months of the year, are the preferential policies and support from the Government along with attractive promotions. Moreover, VinFast brings to customers dedicated and thoughtful customer care activities that bring their own identity.

In 2020, not only implementing the 50% reduction of registration fee according to Decree 70/2020 of the Government (the last six months of the year), VinFast has applied the policy of "Registration of VND0" for cars purchased throughout the year and completing the procedure to receive the car in early 2021. Not only stopping there, in early January 2021, VinFast continued to extend the program "Registration of VND0 " for two models Lux A2.0 and Lux ​​SA2.0 until the end of February 28, 2021.

Capital is the second largest car business in Vietnam, with 16 models (in all segments Grade A, Grade B/C/D, crossover, MPV, SUV, minivan) just assembled domestic and imported (Indonesia, Japan). Toyota Vietnam also achieved encouraging results with 72,000 vehicles sold (just behind TC Motor).

Although not directly enjoying the policy of reducing the registration fee, thanks to the prosperity of the automobile market in general, in 2020, the Japanese car brand Subaru has achieved an increase of over 150% compared to the previous year.

In 2020, submitting to the Government a policy of 50% reduction in car registration fee, the Ministry of Finance thinks that this is a short-term solution to stimulate domestic consumption and remove difficulties for automobile manufacturing and assembly enterprises in the country due to the impact of the Covid-19 pandemic under the Government's Resolution No. 84/NQ-CP of May 29, 2020.

In fact, this goal of the Government has been achieved. The state budget decreased the revenue of VND3,700 billion, but the car production and business enterprises were supported and the automobile market was revived.