[Vacets-local-dc] [Hot Wheels: Status symbol in VN]

[Hai Tran]

Vietnamese getting taste for fancy cars 
HOT WHEELS: Most people in Vietnam are poor, but others are getting richer and using their new-found wealth to buy the latest foreign luxury automobiles 

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 US 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 neighboring 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 US$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 8 percent of Vietnam's total car sales last year. 
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 US$400 in bribes after organizing an illegal street race in southern business center 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 this year. 
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 US$3,000-US$5,000 a deal buying importation rights from diplomats and aid workers and selling them on to car buyers for around US$20,000 to US$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 US$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 WTO, which it aims to do next year, 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. 

 



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