Move to limit car imports sparks opposition among Vietnam dealers

Jun 8, 2011, 7:06 GMT

Hanoi - New rules on car imports aimed at cutting traffic congestion and a rising trade deficit have sparked controversy among car dealers in Vietnam, companies said Wednesday.

Under the new regulations, to take effect June 26, importers of cars with fewer than nine seats have to provide authorization from foreign manufacturers and Vietnamese consulates or embassies. Car dealers also have to prove they have customer service facilities in Vietnam.

Under current regulations, Vietnamese companies only have to provide proof of purchase and quality and registration certificates.

Each year, about 30,000 cars are imported into Vietnam at a cost of about 1 billion dollars, said Vu Huy Hoang, minister of trade and industry. The most popular imports are Toyotas from Japan, Mercedes and BMWs from German and Hyundais from South Korea.

'Limiting these kinds of cars is necessary because Vietnam's infrastructure is inadequate and traffic congestion is increasing,' he said, adding that restricting imports of luxury goods was necessary to reduce the trade deficit.

Many car dealers are not authorized by foreign companies, so consumers did not know where to go if their cars have problems, said Tran Quoc Khanh, Hoang's deputy.

The regulations sparked dismay among local car dealers. Businesses would never be able to get the required documents and many would have to shut down, said Nguyen Van Tuan, who runs a dealership in Hanoi.

Such closures could give a monopoly to the government-controlled Vietnam Automobile Manufacturers' Association (VAMA), said Dinh Xuan Tung, sales manager of the car retailer Hung Viet.

'Without competition in the market, consumers will have fewer choices,' Tung said. 'They will have to accept the prices set by VAMA.'

Vietnam has 5,000 car dealerships. Last week, about 50 met in Hanoi to sign a petition opposing the new regulations and asking for them to be changed. The petition was submitted to the government.

The government aims to curb the trade deficit to below 16 per cent of total export revenues this year, but the gap in the first five months of the year accounted for nearly 19 per cent, or 6.6 billion dollars, of exports.

Vietnam's trade deficit in May was 1.7 billion dollars, the highest level since January 2010, the General Statistics Office said.