HANOI -- Eleven foreign automakers, including Toyota Motor Corp., have urged Vietnam to reconsider higher sales taxes that they say have pushed purchases of passenger cars down sharply in the first seven months of 2004.
The tax, calculated on retail prices rose to 24 percent for passenger cars at the start of this year from five percent.
It is due to rise to 40 percent in 2005 and then 80 percent in 2007. Different rates apply for other vehicles.
Makoto Sasagawa, chairman of the Vietnam Automobile Manufacturers' Association (VAMA), called for a meeting to determine "the proper SCT (special consumption tax) rate" that would help boost the fledgling sector.
The appeal came ahead of a motor show in southern Ho Chi Minh City from Sept. 3 to 7 to showcase new models and outline strategies. The event is sponsored by VAMA, which represents foreign carmakers.
Sasagawa, also president of Toyota Motors Vietnam, a venture between Toyota and a Vietnamese firm, said VAMA members saw a 33 percent drop in passenger car sales in the first seven months of 2004, which he said was due to higher sales taxes.
Between them, the 11 companies sold 15,836 vehicles in the period.
"We are afraid the downtrend will continue on a much more serious scale in the coming years, as a result of the SCT hike roadmap," he said in an Aug. 30 letter to the government, which was provided to Reuters on Wednesday.
VAMA's other members include General Motors' Daewoo, Ford Motor Co., as well as Mercedes Benz. Sasagawa said the group was extremely concerned about the future of the sector.
"We are faced with the most adverse and grave environment that threatens our collective survival," he said.
Vietnam has said its sales tax rise was meant to curb congestion on its underdeveloped roads and help reduce accidents. The rise would also put locally assembled vehicles on par with the rate charged on imported cars.
But foreign carmakers say the higher costs will put cars even further out of the reach of consumers, who pay around $27,000 for a Ford sedan. The average annual income per person is around $400.
The companies were also incensed by a separate tariff rise on imported auto parts that was aimed at forcing producers to use more locally made components.