VietNamNet Bridge – The sharp decrease in the car ownership registration tax is believed to help stimulate the demand for used cars.

Under a new government decree, from April 1, the ownership registration tax on the cars with less than 10 seats, registered at the competent agencies for the second and subsequent times, would be 2 percent instead of the current 12 percent.

The single tax rate will be applied in all localities throughout the country.

Just one day after the day the new decree was released, people flocked to used car centers to seek to look for suitable cars.

Hoai Nam, an officer of a social sciences institute, who was seen at Hung Cuong Auto showroom on Nguyen Van Cu Road in Hanoi, said has been expecting the decision on car ownership registration tax for a long time.

“After reading the news on a newspaper, I came to a lot of used car centers to learn about the market prices. I have some VND400 million which I have saved over the last 10 years. With this sum of money, buying a used car proves to be the best solution,” Nam said.

He went on to say that he really wants a car now to serve his works, and that he would buy a car as soon as he finds a suitable one.

Trung Thang, the owner of Hung Cuong Auto, has noted that the visitors to the center on March 27, or the day after the new decree was released, increased sharply.

Thang said that the buyers now are the ones who really have the demand for cars, but they delayed the car purchase plan because of the high ownership registration tax. As soon as the tax is cut, they have no more reason to delay the plan any further.

However, Thang said, the supply is not profuse at this moment, because car dealers, mostly small and medium ones, had to bargain cars away before to get money for bank debt payment.

Also according to Thang, a medium scaled center like his has some 30 cars on display. However, at this moment, there are only 10 cars available, priced at between VND400 million and VND2 billion. Therefore, if the demand is really high as predicted, the market would be very bustling in just some days, while car dealers would go hunting for used cars.

Ha Minh Tuan, General Director of AnyCar, a used car distribution chain, also thinks that the used car market would warm up on the good news about car ownership registration tax decrease.

Tuan said with the 10 percent tax decrease, buyers would be able to save a big sum of money. The demand for used cars is very big which comes from those, who buy cars for the first time, who have limited financial capability, or those, who want to possess luxurious cars at “reasonable costs.”

Observers say the used car supply in Hanoi is now modest. The owner of a used car center in Cau Giay district said he had to sell tens of used cars cheaply before the tax decrease decision was released, because he had to earn money to pay bank debts.

“Only the big car dealers who have big capital, can hold cars in their storehouses until now and make fat profits when the tax decreases,” he said.

Meanwhile, the majority of other dealers sold cars away many months ago, because they did not know if the car market would recover.

TBKTVN