More support for domestically assembled cars.

Record production of domestically manufactured cars.

According to the latest data from the General Statistics Office, the motor vehicle production index in November 2024 is estimated to have increased by 2.5% compared to October 2024 and by 36.2% compared to November 2023. For the first 11 months of 2024, the motor vehicle production index increased by 18.3% compared to the same period in 2023 (higher than the 14% growth rate of the first 10 months of 2024).

Tax incentives in general, and the Automotive Industry Support Tax Incentive Program in particular, play a crucial role in promoting the development of the automotive industry. Photo: Thaco Truong Hai

The report also indicated that in November 2024, Vietnam's production and assembly of automobiles reached an estimated 47,300 units, a 3% increase compared to September 2024 and a 47.8% increase compared to October 2023. Thus, domestic automobile production has seen its eighth consecutive month of growth since the beginning of 2024 and its sixth consecutive month of increase.

This was also the month with the highest production output since the beginning of 2024. The continued growth momentum helped the total domestic automobile production for the first 10 months of 2024 reach 336,500 vehicles, an increase of 22.4% compared to the same period in 2023. This growth rate improved compared to the 15.8% increase in the first 10 months of 2023.

Overall, in the first 11 months of 2024, the production of automotive parts and components showed significant growth compared to the same period in 2023, specifically: Other parts for motor vehicles increased by 24.55%; other equipment used for motor vehicle engines increased by 5.88%; ignition wiring harnesses and other wiring harnesses used for motor vehicles increased by 5.79%. For automobile production, only two categories saw production increases: vehicles with internal combustion piston engines using compression ignition, carrying 10 or more people with a total payload of over 6 tons and under 18 tons (33.51%), and vehicles with internal combustion piston engines carrying fewer than 10 people, with a cylinder capacity of over 1500 cc and ≤ 3000 cc (31.46%). The production of other types of automobiles decreased slightly by about 3-7%.

Automotive market experts believe that the significant increase in domestic production in November was due to it being the final month of the government 's 50% reduction in registration fees, which lasted for three months (September, October, and November). Furthermore, November was a crucial period for preparing supply for the peak season of the automotive market during the Lunar New Year.

The effectiveness of the tax incentive program for the automotive supporting industry.

According to the Department of Industry ( Ministry of Industry and Trade ), in recent years, tax incentive policies in general and the Automotive Supporting Industry Tax Incentive Program in particular have played an important role in promoting the development of the automotive industry.

“ The domestic automotive market is experiencing good growth, with production scale continuously expanding. In particular, some domestically produced and assembled vehicle models are growing rapidly. The localization rate for some commercial vehicle models is relatively high, and some automotive products and components have been exported to many regional and global markets. Simultaneously, several strong domestic automotive brands have been established; attracting investment and expanding production in the automotive industry, ” the Department of Industry noted.

Since the implementation of the Automotive Supporting Industry Tax Incentive Program, according to the Vietnam Association of Mechanical Engineering (VAMI), member businesses have noted certain positive effects through the application of a 0% preferential import tax rate on raw materials, supplies, and components for the production and assembly of supporting industrial products. This provides a basis for businesses to confidently stabilize production and business operations, expand production scale, invest in new machinery and equipment, modern technology, improve productivity, and participate more deeply in the global automotive industry value chain, gradually affirming the development of the domestic automotive supporting industry.

The effectiveness of the Automotive Industry Tax Incentive Program is clearly demonstrated by impressive figures. As of May 31, 2024, participating businesses had produced over 3.3 million products, with a total tax refund of VND 116.8 billion. The tax refunds for the years 2021-2023 and the first five months of 2024 were VND 2.44 billion; VND 66.56 billion; VND 36.98 billion; and VND 10.86 billion, respectively. On average, approximately VND 39 billion in tax refunds were granted each year.

Customs departments in Bac Ninh, Hanoi, Hai Phong, Quang Nam, Ha Nam Ninh, and Binh Phuoc have implemented seven incentive programs, recording the participation of 17 exemplary enterprises. According to the Ministry of Industry and Trade, the whole country currently has 38 automobile manufacturing and assembly enterprises meeting the standards of Decree 116/2017 and approximately 410 enterprises participating in the production of supporting industries for automobiles with more than 1,229 products already manufactured.

VAMI highly appreciates the effectiveness of this policy. According to VAMI, the 0% import tax on raw materials and components for supporting industrial production has helped businesses stabilize production, enhance competitiveness, and invest heavily in modern technology.

The positive results of the program will continue to provide impetus for the Vietnamese automotive industry to assert its position, not only domestically but also on the global industrial map.

Since 2020, the Ministry of Industry and Trade has granted preferential treatment certificates to approximately 40 projects producing supporting industrial products for the automotive manufacturing and assembly industry, which are included in the list of priority supporting industrial products for development. Tax incentives are a crucial leverage point, helping businesses confidently expand their scale, upgrade equipment, and gradually participate more deeply in the global value chain of the automotive industry.

In line with the policy on developing supporting industries, the Government issued Decree 57/2020/ND-CP, which added the Tax Incentive Program for Automotive Supporting Industries (now Article 9 of Decree 26/2023/ND-CP). The program will be implemented until December 31, 2024.

To date, the tax incentive program for supporting industries in the automotive sector is nearing its end, while the tax incentive program for automobile manufacturing and assembly (issued before this program) has been extended once until the end of 2027.

The Ministry of Finance is seeking feedback on a draft Decree aimed at adjusting tax rates, product categories, and related taxes on import and export activities as stipulated in Article 9 of Decree 26/2023/ND-CP. In particular, the Ministry proposes extending the tax incentive program for automotive supporting industries until December 31, 2027.

According to the Ministry of Industry and Trade, in its automotive industry development strategy, Vietnam aims for its supporting industries to meet approximately 55-60% of the demand for components and parts for domestic automobile production and assembly by 2030, and reach 80-85% by 2045. This reflects the government's determination to sustainably develop the supporting industries while enhancing self-reliance in automobile production and reducing dependence on imported components.

To achieve these goals, Vietnam's automotive supporting industry will continue to promote the application of advanced technology in the manufacturing of important parts and components such as transmissions, gearboxes, engines, and vehicle bodies. At the same time, domestic businesses will need to strengthen cooperation with major automotive corporations, select parts and components that can be produced domestically, and thus assume a crucial role in the global supply chain.

According to the Ministry of Finance, the implementation of tax incentives for the automotive manufacturing and assembly industry, including incentives for supporting industries, has shown that these policies have truly contributed to the development of the domestic automotive manufacturing and assembly industry. These policies have also encouraged businesses to continue investing and expanding automotive production and assembly instead of importing complete vehicles from ASEAN with a 0% import tax, thereby creating a ripple effect on consumers and businesses providing supporting services for the automotive industry such as repair, warranty, and maintenance. Simultaneously, they have also created important infrastructure for the development of the electric vehicle manufacturing and assembly industry.

Source: https://congthuong.vn/them-tro-luc-cho-o-to-lap-rap-trong-nuoc-367963.html