VNBusinessNews – Toyota and Honda have become the first automakers in Viet Nam to cut retail prices following the Government’s move to reduce the value-added tax (VAT) from 10% to 5%, effective this month.

The two Japanese automakers reduced retail prices by 4.4-4.6% depending on models.

Toyota, which has the widest selection of models on sale in Viet Nam, with a total of 15, cut the price of its lowest priced model, the Vios Limo sedan, from US$25,500 to $24,400, and that of its most expensive model, the Land Cruiser, from $108,000 to $103,100.

Honda, which sells four models in Viet Nam, lowered the price of its Civic 1.8MT sedan from $30,000 to $28,650, while the price of its newly-launched SUV, the CR-V 2.4 AT, was reduced from $52,000 to $49,700.

Market watchers said other automakers in Viet Nam were likely to soon follow suit to remain competitive during the economic crisis.

Carmakers in Viet Nam saw a 37% growth in sales last year, reaching 110,186 units at a time when the auto industry worldwide was bemoaning a nosedive in sales.

Nevertheless, auto sales in Viet Nam remain tiny in proportion to the nation’s overall population of over 84 million people, and the domestic auto industry saw sales growth drop off sharply in the last months of 2008, as the global economic slowdown hit Vietnamese consumers and the Government moved in August to triple registration fees up to 15% of the car’s purchase price.

According to the Ministry of Industry and Trade, Viet Nam has more than 40 automakers and over 100 auto parts producers, with a total production capacity of over 200,000 units per year. (VNS)