Việt Nam’s plan to reduce import tariffs on fully built-up (CBU) vehicles from the United States to zero per cent has attracted attention, with many seeing it as a strategic move to boost trade and expand consumer choices. However, its immediate effect on car prices may be limited.

Automotive experts warn that a zero per cent tariff does not guarantee a major price drop.

Khuất Thế Đạt, a market analyst, explained that while the policy reflects Việt Nam’s intent to strengthen trade relations with the US, the real impact on car prices will be modest. This is because import tariffs are just one part of the vehicle's cost. Other factors, such as the Special Consumption Tax (50-60 per cent for larger engines), VAT, logistics and dealer margins, keep prices high.

The 2018 tariff elimination on vehicles from ASEAN countries is a good example. Although many expected sharp price reductions, the actual drop was only slight due to similar cost structures. According to Đạt, even with a zero per cent tariff, the price of US cars may only fall marginally.

Nguyễn Vĩnh Nam, another expert, pointed out that the limited presence of American car brands in Việt Nam also reduces the short-term impact of the tariff change. Brands like Chevrolet have exited, while Ford mainly imports from Thailand, which already enjoy tariff-free access.

Premium models like the Jeep Wrangler and RAM 1500, which are among the few US cars sold in Việt Nam, are expensive and beyond the reach of most consumers. Even with no tariffs, prices for these models may only drop by 15-20 per cent, according to market insiders.

Although the tariff reduction may not drastically lower prices in the short term, it holds potential to reshape the market. If American brands like Tesla enter the market, consumers could enjoy more options, particularly in the high-end segment. The presence of competitively priced US cars could also push existing players – both ASEAN imports and locally assembled models – to improve their offers.

However, domestic manufacturers face challenges. With low localisation rates (under 40 per cent) and smaller production scales, their costs are 20 per cent higher than those of vehicles imported from Thailand and Indonesia. If American cars benefit further from the new tax policy, local automakers could struggle, especially in the higher price segments.

The car assembly line at the Honda Phúc Yên Factory, Vĩnh Phúc Province. If American cars benefit further from the new tax policy, local car makers could struggle, especially in the higher price segments. — VNA/VNS Photo Trần Việt

Domestic models, particularly in the affordable segment, still have advantages. They benefit from policies such as lower taxes for small engines and incentives on registration fees. Frequent promotions also help lower costs for consumers, keeping locally assembled vehicles attractive despite the influx of imports.

According to experts, increased competition can drive positive changes. As consumers gain more choices, businesses will be pressured to improve product quality, customer service and pricing. Over time, this could lead to a healthier, more balanced market, where consumers enjoy better value. BIZHUB/VNS

IN BOX

Despite this, Việt Nam’s automobile market is seeing strong growth.

According to data from the General Statistics Office, 56,563 new vehicles entered the market in April, a 4.8 per cent increase compared to March. Local production reached 39,500 units, the highest monthly output of 2025 so far. Compared to April 2024, domestic production rose by 60 per cent.

On the import side, Việt Nam brought in 17,063 vehicles worth US$423 million in April, a 7.6 per cent rise in volume and a 28.2 per cent increase in value compared to March. Imports were up 47.7 per cent in volume and 65.4 per cent in value compared to April last year.

In total, the first four months of 2025 saw Việt Nam import 63,520 vehicles worth $1.4 billion, marking a 45.2 per cent increase in volume and 50.7 per cent rise in value year-on-year.

This surge in both production and imports comes despite large inventories at many dealerships, some of which are already offering discounts on older models. Experts believe this oversupply, coupled with moderate demand, could push car prices even lower in the coming months.

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