Vietnam ’s total car sales in 2012 will drop drastically and return to2007’s level, according to the Ministry of Industry and Trade (MoIT).

The forecast is based on the seasonally adjustedannual rate ( SAAR ), when only 6,982 cars were sold in April, a 24percent drop over the previous month and 46 percent fall against thesame period last year.

It is estimated that only 81,000 cars will be sold in the country by the end of 2012.

According to the MoIT, car manufacturers and assemblers are takingmeasures to cut down production levels due to increasingly biggerstockpiles. The distribution network is also struggling with the backlog.

On top of this, customers are becoming muchmore careful when buying a car due to the gloomy economic outlook, highregistration fees in Hanoi and Ho Chi Minh City and high interestrates.

For the market to recover, it is necessaryfor manufacturers and assemblers to cut costs and reduce car prices.However, policies to reduce value add tax and luxury tax are alsoessential, the MoIT said.

The MoIT is to ask thegovernment to apply preferences to products that contain a high level ofdomestically produced spare parts.

According tostatistics released by the Vietnam Automakers Association, Vietnamsold 138,000 cars in 2011, a drop of 5 percent compared to the previousyear.-VNA