Toyota’s Lexus plan faces uphill climb
Toyota’s Lexus plan faces uphill climb
Toyota will soon bring its top of the line Lexus models to Vietnam, but it may find it difficult to attract customers.
Toyota’s plan reportedly started two years ago, but due to a number of reasons the Japanese manufacturer waited and will finally release the Lexus models to the Vietnamese market late this year, said a company source.
The models to be introduced include the LX 570, LS 460, GS 350, RX 350 and IS 350, already popular in the local market.
Lexus’ main rivals would be importers like those brought into Vietnam by overseas Vietnamese repatriates.
In 2012 more than 1,140 luxury cars were imported by overseas Vietnamese, 65 per cent of which were Lexus.
Compared to Lexus models imported by the manufacturer, those imported by Vietnam’s repatriates are not burdened by import duties and VAT tax and which makes an IS model $40,000 cheaper than those brought in by Toyota.
The IS is the cheapest model of the aforementioned five, priced at around $35,950 (excluding tax).
Other competitors include imports in the form of gifts which receive tax incentives, and have risen considerably in volume over recent years.
Other challengers are Lexus cars imported for diplomats in the form of temporary import and re-export. These are tax free but cannot change hands for a certain period of time.
After this time the tax is calculated based on amortisation value, making the cars cheaper than those imported by the manufacturer.
There are nearly 7,000 different Lexus models on Vietnam’s roads today.
Officials have applied diverse measures to reduce the fraudulent import of luxury cars by overseas Vietnamese, in the form of gifts, or by diplomats and if successful should defend Lexus’ position but even so dealerships and traders say overseas Vietnamese imports would still be at least $25,000 cheaper than those sold by Toyota.
Alternative imports are not the only issue, as the auto company will have to also compete with other luxury car makers well established in the country such as Mercedes Benz, BMW, and Audi.
German automobiles have been well promoted by the media and through television and films and are perceived as having certain advantages against other luxury brands.
It seems that Toyota faces great challenges in the market until tax code loopholes are closed and illegal importers are thwarted.
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