 Manufacturing
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06 Mar 09 12:34
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BKK Motor Show Organizers urge VAT cut to boost car sales
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VAT reduction from 7% to 4% could save thousands of jobs, says organizer
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- It is, perhaps, the attention to detail that sets Falcon Hill apart from other luxury properties in Thailand.
Kim Falcon Ravn, Denmark
Managing Director
Visit Falcon Hill, Hua-Hin
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Grand Prix International, organizers of the 30 th Bangkok International Motor Show have pledged the government to consider temporarily reducing VAT to stimulate passenger car and commercial vehicle sales.
Earlier the Joint Committee on Commerce, Industry and Banking disagreed with the auto industry's appeal for a temporary 3-percentage-point reduction in the excise tax.
Jaturont Komolmis, vice chairman of the Bangkok International Motor Show organizing committee, informed media yesterday that car-makers employed as many as 750,000 workers, and up to 20% of them could lose their jobs due to the drop in car and pick-up sales demand.
"No matter which way, the government should help prevent these people from being laid off due to the decline in car sales and exports," he said.
Governments in Singapore, Malaysia, India and China have announced tax-cut measures to save their automobile industries, he said.
"Singapore does not assemble automobiles or hire any workers, but they still lowered the tax to help the automotive sector he says. "These cuts are only temporary, and will be lifted as soon as the situation improves."
A reduction of the value added tax for auto sales
"Today whenever a vehicle is sold, whether it is brand new or second-, third- or fourth-hand, there is 7% VAT, which is redundant," he said.
A revision of VAT rates does not have to be passed by the Cabinet, and could be implemented right away, he elaborates.
Prachin Eamlumnow, chairman of the organizing committee, says consumers had been holding off purchases of cars on news that there could be an excise tax cut.
"But it turns out that they can't do it, which means that those who do plan to buy a car don't have to wait any longer," he says
This will help car companies taking part in the show to maximize sales.
Prachin said that last year 15,000 orders were placed at the show and he expects a 10% increase this year.
"With the sales slump in January and February, as well as March, which is usually a low sales month since consumers wait for motor show offers, car companies will do everything in order to boost sales at the show because this is their last chance," he adds.
"The economy may not be good, but we are confident that the show will surely help stimulate the automotive market significantly," he says.
As much as 20 billion THB is expected to change hands thanks to the event, and most of that will come from sales of vehicles rather than accessories, which should fetch about 2 billion THB to 3 billion THB.
Last year the show draw 1.5 million visitors, and Prachin expects attendance to be up this year.
"We expect 1.6 million to 1.7 million visitors will come, as we have extended the show by two days," he says.
This year the show runs from March 26 to April 6, with March 24 and March 25 reserved for VIPs and the press, respectively.
Among the highlights is the Mercedes-Benz E-Class two door coupe, also known as the ELK, which will make its right-hand-drive world debut, while BMW will stage a world premier for the Z4 roadster at the show.
The Z4 will be shown in Bangkok before Germany, where the global launch will be staged in May, he adds.
There will also be a Lotus Two-11, which was first launched in Geneva with only its carbon-fibre body. The car to be shown in Bangkok will be complete with engine and chassis, he said.
The most expensive car will be the 35 million THB Aston Martin DBS, which will be exhibited by Master Car Rental rather than the official importer. The exclusive sports car will be offered for rent for those who want a super car experience.
Kasikorn Leasing and Krungthai Leasing will offer financing for auto buyers at the show.
Prachin said that more than 200 million THB will be used to stage this year's event, which marks the 30th anniversary of the Bangkok International Motor Show.
The price for show space has been raised by 5%, while the admission charge has gone from 80 THB to 100 THB.
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