New riches fuel Vietnam luxury car dreams
New riches fuel Vietnam luxury car dreams
Nguyen Nhat Lam,
Reuters/Hanoi
Le Anh Hung is doing what his father and grandfather only dreamed
of.
Sitting in a plush BMW showroom, the 32-year-old owner of a
fire protection business in communist Vietnam watched with
satisfaction as clerks counted his US$50,000 stack of U.S. bills,
to be exchanged for a gleaming new black car.
Hanoi, once renowned for its colonial charm and bicycles, now
features the purr of luxury cars such as Mercedes, BMW, Lexus and
even Hollywood's brawny vehicle of choice, the military-based
Hummer.
"The car is not just a means of transport any more, it has to
be fast and be a statement about yourself," Hung said.
Unlike in neighbouring Thailand and Malaysia, the sight of an
expensive sedan is still relatively rare in Vietnam, a country
where average income still ranks among the world's lowest, around
$400 a year.
While about two-thirds of its people still farm as their
ancestors did, the speed at which young Vietnamese entrepreneurs
are amassing wealth has led to a luxury car boom.
Sales of Mercedes, a brand of DaimlerChrysler, jumped more
than 30 percent last year to 3,376 -- nearly eight percent of
Vietnam's total 2003 car sales.
More Mercedes were sold than in much richer Malaysia, where
average earnings are 20 times that of Vietnam, as explosive
economic growth spawns a burgeoning class of nouveaux riches.
Having made a mint in real estate or some other enterprise, they
have shrugged off the country's socialist past.
They are not shy of displaying their new-found wealth on the
potholed roads of Vietnam, up to three-quarters of which remain
rural dirt tracks.
A group of young drivers went too far last year when they
offered police $400 in bribes after organising an illegal street
race in southern business centre Ho Chi Minh that featured a BMW,
Mercedes, Lexus and a Toyota.
Local newspapers were filled with denunciations of reckless,
free-spending youth, all said to be children of wealthy business
people. The 17-year-old ringleader was jailed for three years.
Vietnam has moved to slow the boom. It has raised the tax on
imported car parts and last year slapped a 24 percent special
consumption tax on locally assembled vehicles.
Sales by Vietnam's 11 foreign-invested auto assemblers dropped
a quarter from the first quarter of last year to the first three
months of 2004.
However, businessmen with money to burn can look past the
locally available Mercedes and BMW luxury brands, and dodge
tariffs of up to 400 percent on cars imported for private use.
They turn to middlemen who earn thousands buying the importation
rights Hanoi grants to diplomats and aid workers.
Lai, a former embassy driver, now makes $3,000-$5,000 a deal
buying importation rights from diplomats and aid workers and
selling them on to car buyers for around $20,000 to $25,000.
North Korean diplomats are particularly keen sellers of their
right to import one car each, a trade confirmed by a diplomatic
source.
While the sale of the diplomatic car rights raises eyebrows,
those involved in the deals say they don't break any laws.
"The trade is completely legal," said full-time luxury car
importer Lai, who nevertheless only wanted to be identified by
his first name.
Having paid out the equivalent price of a locally assembled
Ford five-seater sedan, most buyers of importation rights go for
top-of-the-line models worth around $100,000, such as the BMW 7
Series or Toyota's Lexus S400.
Lai said diplomats have the right to sell their assets
including rights to quota-free imported cars. Buyers must then
convert the diplomatic plates to Vietnamese ones.
Those who don't wish to go that route can wait for Vietnam to
join the World Trade Organisation, which it aims to do in 2005,
when import tariffs will be scrapped.
Hung, who 10 years ago was riding around on a locally built
motorbike, is already looking forward to that day.
"I would go for a Ferrari when we can import tax free, for now
I am happy with my car," he gloated.
REUTERS
GetRTR 3.00 -- MAY 26, 2004 08:39:14