Taxes Still Drag On Most Popular Vehicles

Vietnam's new vehicle market is characterised by fluctuating tariffs,which often make it hard to identify sustainable sales patterns. After there was evidence of tariff changes kicking in as sales for Q110 were downby 2%, despite an 80% increase in passenger car sales, totalsales had returned to positive growth of 5% by the end of H110, although passenger cargrowth was lower at 29%. The MPV/SUV segment is still impacted by thehigher STC with sales down 10%, while commercial vehicle sales were upjust 2% y-o-y. While we believe that consumers appear to be adjusting to the new tax,as shown in the improvement during Q210, we have lowered our forecastfor sales of domestically-produced vehicles to growth of 7.8%.

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