Strategic car debate heats up again

The Vietnam Automobile Manufacturers’ Association (VAMA) has informed government agencies that the proposal by the Ministry of Industry and Trade (MOIT) to make 6-9 seat cars the strategic line is unreasonable.

VAMA members all hold different ideas about which car models should be chosen as the strategic car line. Toyota, Vinastar and GM-Daewoo advocate 6-9 seat cars, while Ford Vietnam says Vietnam should not have just one strategic car line.

A representative from Mekong automobile manufacturer argues that strategic cars should be 4-7 seats with foldable back rows designed to allow cargo transport as well. The cylinder capacity should be less than 1500 cc and meet Euro 4 standards.

Truong Hai Auto thinks that 6-9 seat cars with cylinder capacities of 1.5L would be too weak, for use only in Vietnam and cannot meet export standards.

“We should only offer guidelines for consumption, while we should not give preferences to certain car models,” a Truong Hai representative proposed.

According to GM Daewoo and Vinastar, if only 6-9 seat autos are chosen as strategic cars, consumers will not have many choices. Automobile manufacturers have also warned that the proposed car models are relatively “new” for Vietnam, but they are not at all new to ASEAN countries.

“Such cars may be imported to Vietnam under the mode of completely built unit which will cause a trade deficit, while it will be very difficult to export cars to regional markets,” businesses have cautioned.

Vietnam’s strategic car line should not be the same as those of other ASEAN countries, so that Vietnam can export cars to those members.

VAMA Chairman Akito Tachibanna believes that the Government should set up a taskforce of relevant ministries and VAMA members to find out the optimum strategic car line for Vietnam.

Ngo Van Tru, Deputy Director of the Heavy Industry Department under the Ministry of Industry and Trade, told Tien Phong newspaper that if the Government does not define strategic car line, Vietnam’s automobile problems will not be settled even by 2018.

“If we do not have any car line with enough productivity to raise the localization ratio, Vietnam’s automobile industry will still be problematic,” Tru observed.

Meanwhile, Deputy Head of the Market and Price Research Institute Dr. Vu Dinh Anh thinks differently. He has questioned whether it is really necessary to establish a strategic car line.

Anh argues that it is necessary to know why the auto localization plan has failed completely, even with many preferences, instead of discussing strategic cars.

In November 2009, MOIT proposed to select 6-9 seat cars with a cylinder capacity of less than 1.5L that meets Euro 2 standards as strategic cars. The ministry also proposed to offer tax incentives to encourage its development. The luxury tax should be at lowest 30 percent (other cars are imposed 45, 50 and 60 percent). Strategic car manufacturers would enjoy corporate income tax exemption or reduction, zero percent tax on imported equipments and materials, and 50 percent reduction in VAT and ownership registration tax

VietNamNet/TP

Tags: Vietnam automotive industry, Vietnam strategic car