The MG Lê Văn Lương showroom in Hà Nội. In recent years, numerous Chinese automakers have entered the market with aggressive pricing strategies. — Photo vov.vn

HÀ NỘI — Việt Nam’s car market is entering a pivotal transition period, as multiple factors related to policy, trade and competition converge simultaneously.

Three key drivers are expected to directly push car prices down sharply this year: new tax policies for hybrid vehicles, the roadmap for cutting import tariffs on cars from Europe and intensifying competitive pressure from Chinese car brands.

The first and most direct factor affecting car prices from 2026 is the amended Special Consumption Tax (SCT) Law, which took effect on January 1.

Under the new law, hybrid vehicles, including self-charging hybrids (HEVs) and plug-in hybrids (PHEVs), will be subject to a special consumption tax rate equivalent to only 70 per cent of that applied to petrol- or diesel-powered vehicles of the same engine displacement. Previously, this tax incentive applied only to PHEVs.

In terms of pricing, a reduction in the special consumption tax also leads to lower associated costs, such as VAT and registration fees.

A 30 per cent cut in SCT could significantly reduce both vehicle prices and registration fees for hybrid cars.

For example, for a model with a taxable price of VNĐ500 million (roughly US$19,000), the tax reduction could lower the vehicle price by around VNĐ70–80 million. In the mid-range and high-end segments, savings could reach up to VNĐ150 million per vehicle.

A sales consultant at a Toyota dealership in Mỹ Đình, Hà Nội, noted that since information about the new tax policy was announced, number of customers interest in hybrid vehicles had increased markedly.

“Many customers who previously thought they would choose petrol cars because they are cheaper are now considering hybrids, as the expect cost gap is no longer large, while fuel savings over the long term are attractive,” he said.

The second major factor affecting car prices this year is the continued reduction of import tariffs on completely built-up cars from Europe under the EU–Vietnam Free Trade Agreement (EVFTA).

Under the EVFTA commitments, import duties on European cars will gradually be reduced to 0 per cent over time.

Import tariffs on vehicles with engine displacements from 1.5 to 2.5 litres were reduced to 31.2–35.4 per cent from January 1 last year. These rates will fall further to around 24–29 per cent this year, significantly lower than the previous levels of over 40 per cent.

This reduction brings European car prices closer to those of domestically assembled vehicles or cars imported from ASEAN countries, which previously enjoyed a major price advantage.

Experts believe that tariff cuts under the EVFTA not only made European cars more accessible to consumers, but also created clear competitive pressure, forcing domestic assemblers to adjust pricing strategies, increase incentives or upgrade products to retain customers.

The third driver and a major wildcard for Việt Nam’s auto market is the wave of Chinese vehicles. In recent years, numerous Chinese automakers have entered the market with aggressive pricing strategies, focusing heavily on electric vehicles and hybrids.

Many Chinese models are priced significantly lower than Japanese and South Korean cars, while offering extensive equipment lists and modern technologies.

When combined with tax incentives for hybrid and electric vehicles, prices of these models are expected to become even more competitive.

As all three drivers take effect simultaneously, Việt Nam’s automobile market is expected to enter a phase of intense competition this year.

Prices will no longer be a 'safe zone' for automakers, while consumers will have more choices across nearly all segments, from petrol and hybrid vehicles to electric cars.

Analysts believe the market is likely to see a restructuring in which brands with suitable product strategies, competitive pricing and strong after-sales services will maintain market share, while those slow to adapt risk losing ground.

Taken together, tax policies, international trade dynamics and competitive pressures suggest that 2026 is likely to be a turning point for car prices in Việt Nam.

Beyond delivering direct benefits to consumers, the next few years will play a crucial role in reshaping the market and accelerating the shift toward fuel-efficient and environmentally friendly vehicles. — VNS