It is forecast that the prices of many imported luxury car models will decline by hundreds of millions of dong from early 2026 as taxes are reduced.

This is expected to provide consumers with greater opportunities to purchase luxury vehicles.

Taxes continue to fall

Under commitments in the EU-Vietnam Free Trade Agreement (EVFTA), Vietnam will open its market to imported cars from the EU with a preferential import duty rate of 0%. Passenger cars in the B9 category will have their import duty eliminated after ten equal annual reductions, while passenger cars in the B10 category will reach duty elimination after eleven equal annual reductions.

The base import duty rate for passenger cars during EVFTA negotiations was 78% for vehicles with engine displacement below 3.0 litres and 74% for vehicles above 3.0 litres.

Since the agreement took effect in 2020, import duties on completely built-up cars from the EU to Vietnam have decreased by more than 7% per year under the equal reduction roadmap, gradually lowering vehicle prices.

By 2026, import duty rates on cars from the EU are expected to fall to around 28% for vehicles with engine displacement below 3.0 litres and around 23% for vehicles above 3.0 litres. At these rates, vehicle prices are anticipated to continue declining compared with 2025.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), of which Vietnam is a member, follows a similar approach. Under its roadmap, a series of tariff lines from CPTPP countries into Vietnam will be reduced to 0%, including passenger cars, with an average annual reduction of approximately 6%.

For vehicles with engine displacement above 3.0 litres, duties are scheduled to reach 0% by 2029, while vehicles below 3.0 litres will reach 0% by 2032. From 1 January 2026, import duties on completely built-up cars from CPTPP member countries will be reduced by 6% compared with 2025. Among CPTPP countries, Japan currently accounts for the largest volume of car exports to Vietnam.

In addition, Vietnam is promoting the adoption of green vehicles. Under the amended Special Consumption Tax Law, passed by the National Assembly on 14th June 2025 and effective from 1st January 2026, petrol-electric hybrid vehicles will be subject to a special consumption tax at 70% of the rate applied to conventional internal combustion engine vehicles, with no distinction between self-charging hybrids (HEV) and plug-in hybrids (PHEV).

At present, only PHEVs benefit from the preferential special consumption tax rate, whereas HEVs do not. Under the new regulation, HEVs will also receive tax incentives from early 2026.

Shift towards luxury vehicles

Completely built-up cars imported from the EU to Vietnam primarily comprise luxury vehicles, including Mercedes, Audi, BMW, and Land Rover, as well as supercars such as Lamborghini and Ferrari.

Imports from Japan mainly consist of premium models, including the Toyota Land Cruiser, Prado, Alphard, and Lexus. Many of the luxury vehicles imported from the EU and Japan in recent years are HEV models.

From 2026, luxury car prices are expected to continue declining due to tax reductions. With a 7% cut in import duty, a completely built-up car imported from the EU with a 2.0-litre engine and a declared price of US$ 30,000 would experience a price reduction of approximately US$ 2,100.

Due to the cumulative nature of taxes, a reduction in import duty also decreases the amounts payable for special consumption tax and value-added tax. Overall, the total reduction could exceed US$ 3,000, equivalent to around VND 80 million (US$ 3,040), in 2026.

Ultra-luxury cars and supercars are expected to benefit significantly. For instance, an ultra-luxury car with a declared price of US$ 300,000 and a 6.0-litre engine would see a 7% duty cut translate into a reduction of up to US$ 21,000 in 2026.

This calculation does not account for the special consumption tax of 150% applied to vehicles with engine displacement of 6.0 litres or more, nor the 10% value-added tax, meaning the overall reduction would be greater.

For vehicles imported from Japan, a 6% cut in import duties is also projected to lower prices. Additionally, for models using HEV technology that benefit from reduced special consumption tax, price reductions could be even more substantial, amounting to hundreds of millions of dong.

As taxes decrease and vehicle prices continue to fall, a wider range of luxury models is expected to enter the market, intensifying competition. This will provide consumers with greater opportunities to transition from mass-market vehicles to luxury cars.