Top 10 highlights of Vietnam's automotive industry in 2016

The revised Special Consumption Tax Law for automobiles came into effect on July 1, 2016. Under the new law, vehicles with an engine capacity of under 1,500cc received a tax reduction, while other categories saw their tax rates either remain the same or increase.

• Under 1,500cc: old 45% - new 40%.
• 1,500 - 2,000cc: unchanged at 45%.
• 2,500 - 3,000cc: old 50% - new 55%.
• 3,000 - 4,000cc: old 60% - new 90%.
• 4,000 - 5,000cc: old 60% - new 110%.
• 5,000 - 6,000cc: old 60% - new 130%.
• Above 6,000cc: old 60% - new 150%.

As a result of these changes, the prices of smaller and mid-sized sedans and SUVs saw a slight reduction, while luxury and supercar prices increased sharply.

Circular 58/TT-BGTVT required that all driver's licenses (for cars) be switched to a new PET (plastic) material by December 31, 2016. After six months, individuals holding paper-based licenses would need to retake the theoretical exam to receive the new license. This regulation sparked considerable debate, with many people who owned older paper licenses arguing that mandating the switch within a set time frame was unjustified. The Ministry of Justice later affirmed that the Ministry of Transport's directive was "legally unfounded, inconsistent, and detrimental to the legal rights and interests of citizens." As a result, the Ministry of Transport rescinded the mandate but instead encouraged drivers to voluntarily transition to the new PET licenses.

Circular 57/2015/TT-BCA from the Ministry of Public Security requires that all vehicles be equipped with fire extinguishers, with fines ranging from 300,000 VND to 500,000 VND for regular cars, and from 3 to 5 million VND for vehicles carrying hazardous or flammable materials. However, the practical implementation of this rule proved controversial, especially after incidents where fire extinguishers exploded, damaging both the vehicle and the owner. This led to widespread opposition to the circular. The Traffic Police Department clarified that officers were not authorized to stop vehicles solely for checking fire safety equipment.

In June 2016, Thaco Truong Hai announced a recall of 10,000 Mazda 3 cars with the SkyActiv-G 1.5L engine, addressing the persistent check-engine light issue, which had been a point of contention for over a year. The issue, also known as the 'goldfish error,' began in July 2015, with around 100 customers reporting the engine warning light turning on before reaching 10,000 km. Mazda initially provided temporary solutions, such as cleaning the fuel injection system, but these did not fully resolve the problem. Mazda Vietnam later issued a recall for affected vehicles to conduct thorough checks. The issue was specific to the 1.5L SkyActiv engine, and Mazda Japan was actively working on a permanent solution.

In July 2016, the General Department of Customs issued a notice regarding discrepancies in the declared import values of cars at five authorized ports. In August 2016, the General Department of Taxation received instructions from the National Steering Committee on Anti-Smuggling, Commercial Fraud, and Counterfeit Goods to investigate certain dealerships that were allegedly exploiting car import policies to evade taxes and misdeclare the values of imported vehicles. As a result, several high-end and luxury car dealerships were subjected to tax recovery penalties amounting to 1,000 billion VND. Notable dealerships involved in the scandal included Tan Thanh Do, which distributed Jaguar Land Rover, Regal (Rolls-Royce), and Euro Auto (BMW, MINI, and other European brands).

The plan to reduce import duties to 0% by 2018 has had a significant impact on consumer purchasing habits. Specifically, popular models like the Toyota Fortuner, Ford Everest, Honda Civic, and Mitsubishi Pajero Sport are increasingly being imported as fully assembled units from Thailand rather than being locally assembled. This trend is also fueled by consumer concerns over the quality of local assembly, which is perceived as inferior compared to some ASEAN countries. Moreover, local manufacturers are less motivated to maintain assembly plants due to the higher costs associated with local production compared to importing fully assembled cars.

In 2016, the Euro 2 emission standard was in effect for the final time. From 2017 onwards, Euro 3 and Euro 4 standards will apply to all vehicles, whether locally assembled, produced, or imported as complete units. The Euro 3 and Euro 4 emission regulations were set by the United Nations Economic Commission for Europe and the European Union. Automakers will need to adjust their technology to ensure a balance between vehicle performance and meeting emission standards. Additionally, the fuel used in these vehicles must meet specific quality standards in order to comply with the new emission requirements.

The issue of car imports became a hot topic in 2016 due to Circular 20/2011/TT-BCT, which required official authorization letters for importing cars. This regulation was set to expire on July 1, 2016. Independent car importers called for the removal of the official authorization requirement to eliminate barriers to car imports and create a more competitive market, avoiding monopolies in distribution. However, as of January 2017, no official replacement for Circular 20 had been issued. The battle between official and independent car importers will continue into 2017, with the advantage going to those with authorization letters. The Ministry of Transport, Ministry of Industry and Trade, and Ministry of Science and Technology are working on drafting a more specific regulation for car imports, which will be officially released soon.

Starting August 1, 2016, Decree 46/2016/ND-CP came into effect, replacing Decrees 171/2013 and 107/2014, and introduced new regulations for traffic violation penalties. For instance, violations such as running a yellow light, speeding, driving with alcohol levels above the legal limit, ignoring traffic signals, or fleeing the scene of an accident have resulted in significantly higher fines. However, the new decree has sparked controversy, particularly regarding the penalty for running a yellow light, which many believe is unfairly harsh. On the other hand, the majority of the population supports other aspects of the decree, as it aims to promote a safer traffic environment.

The new National Technical Standards for Road Signs, issued under Circular 06/2016/TT-BGTVT, will serve as the new guide for road transportation activities in Vietnam. Some important updates for road users include: the rule that no-turn signs no longer prohibit U-turns, as well as new regulations on overtaking on the right, among others.