Toyota Motor and Honda Motor have suspended exports to Vietnam since the beginning of the year following the implementation of a rule that requires stringent checks on imported vehicles, a move viewed as protectionism by industry officials.
The new rule came into effect just as Vietnam finally eliminated its import tariff for automobiles from within the Association of Southeast Asian Nations from 30% on Jan. 1, two years later than other developed members of the bloc.
Toyota said on Tuesday that it has halted all production for export to the Vietnamese market. The Japanese automaker manufactures locally in Vietnam, but imports from Thailand, Indonesia and Japan account for around one-fifth of what it sells in the market, or 1,000 units per month. Models imported include the Hilux pickup trucks, Yaris subcompacts, sports utility vehicle Fortuner and the luxury car Lexus.
“The Vietnamese market slowed down last year clearly because consumers refrained from buying as they waited for the tariff removal at the end of 2017,” Toyota Motor Thailand President Michinobu Sugata told reporters in Bangkok.
Indeed, auto sales in Vietnam between January and November slumped 10% on the year to 245,000 units. “We were anticipating a big jump in 2018 but due to the non-tariff barriers set by the Vietnamese government we cannot export to the market at all,” he said.
The so-called Decree 116, announced in October, requires emission and safety tests to be conducted on every batch of automobile to be imported. In the past, only the first shipment of each model would be tested.
The Japanese Chamber of Commerce and Industry in Vietnam said one emission test could take two months and cost up to $10,000. “It will cause [a] huge waste of time and money,” it said in a statement addressing Prime Minister Nguyen Xuan Phuc in December.
The decree also requires all models to obtain a Vehicle Type Approval certification issued by authorities of the exporting country. VTA certifications are to show that the vehicle meets standards of the country it will be sold in and is normally issued by domestic entities of the importing country.
Since the decree was announced in October, the governments of major exporters such as Japan, Thailand and the U.S. have expressed concerns to Vietnam that it would become impossible for them to sell into the country. They have also suggested that the decree could violate World Trade Organization rules.
Source: Big Blow