HANOI: Vietnam’s auto industry is on the brink of a major transformation as excise tax reductions set to take effect in 2026 are expected to significantly cut the cost of hybrid vehicles, driving new investment and propelling rapid market expansion.
The sector is approaching a pivotal moment following the National Assembly’s June 14 approval of amendments to the Law on Excise Tax, extending preferential rates to self-charging hybrid electric vehicles (HEVs).
Under the revised framework, effective Jan 1, 2026, HEVs will benefit from a tax rate equal to 70 per cent of that applied to petrol or diesel vehicles of comparable engine size, a concession previously limited to plug-in hybrids (PHEVs).
The expanded incentive is poised to make hybrid models more accessible to mass-market consumers. Price projections indicate a substantial reduction: excise tax on a sample hybrid model will drop to 157.5 million VND (US$5,975), with a corresponding decrease in VAT, lowering the final retail price to 723.25 million VND.
Consumers stand to save roughly 73.25 million VND, with even greater reductions projected for higher-end models.
Beyond boosting sales, the policy is expected to accelerate the shift toward green transport. With advantages in fuel efficiency and emissions reduction, hybrids are emerging as an optimal transitional solution as Vietnam intensifies efforts to curb pollution, promote sustainability and move toward carbon neutrality.
Major automakers such as Toyota and Honda view hybrid technology as an essential stepping stone in the transition from internal combustion engines to full electrification.
Toyota Motor Vietnam has announced an investment exceeding US$360 million to upgrade infrastructure and establish hybrid assembly lines at its Phu Tho facility.
It currently distributes several hybrid models, including the Corolla Cross Hybrid, Innova Cross Hybrid, Altis Hybrid, Camry Hybrid and Yaris Cross Hybrid, and expects its first domestically assembled hybrid models to debut in 2027.
The move aims to boost local production capacity, reduce dependence on imports and enhance competitiveness ahead of an anticipated hybrid surge. – BERNAMA
