Auto-makers Find Way for Survival and Development
The stagnant sale volume of automobile on the domestic market in the beginning days of this Year mainly blamed for the lift of hefty tax preferences has made local auto-makers face actual concerns over unpredictable developments of the Vietnamese auto market this year.
As of January 1st, 2010, value added tax (VAT) increased again by 50 % up to 10 %; whilst registration fees for ownership on cars rose again by 50 % up to 10 % in Hanoi and 12 % in other cities and province.
Similarly, preferential interest rate of bank loans at mere four % for individuals to purchase cars was lifted by December 31, 2009. It is more difficult for the auto market when recently the ceiling forex rate has been adjusted to increase at VND18,500/US$1.
Such moves have covered dark clouds over the positive outcomes of the automobile market achieved last year. The industry source indicated that a very small number of cars have been sold out at most of local auto-makers in the early this year.
2009 year’s victory now just dreamy
Despite the global economic crisis, Vietnamese auto market remained to be very successful thanks to the Government’s demand stimulus package including the reduction of 50 % of VAT, registration fees for ownership and preferential interest rate of bank loans for individuals’ car purchase.
Figures released by the Vietnam Automobile Manufacturers’ Association (VAMA) demonstrated that in 2009 the sale volume of locally assembled cars reached a record level of nearly 120,000 units, an increase of 6.7 % against the previous year.
Amongst them, Mercedes-Benz Vietnam, Vietnam Motor Corporation, GM Daewoo VIDAMCO, Ford Vietnam, Vinastar (Mitsubishi) took the lead with the increase of sale growth of 60 %, 50 %, 29 %, 28 % and 25 %, respectively.
Toyota Innova model became the best seller with the sale volume of 8,475 units, followed by Toyota Corolla Altis (6,468 units), Toyota Fortuner (5,876 units), Toyota Vios (5,141 units) and Chevrolet Spark (4,603 units).
On the other hand, the General Statistics Office of Vietnam’s estimated figures indicated that around 76,300 brand-new and second hand cars under the mode of Complete Built-up Unit (CBU) were imported in 2009 with the total import value of US$1.171 billion.
As such, the import volume and import value of CBU increased by 50 % and 13 % against 2008 year, respectively.
2010-year scenarios
Dealing with the dramatical reduction of car sale volume in the beginning days of this year, a series of promotion campaigns aimed at stimulating the purchasing demand of consumers have been released by auto-makers such as Toyota, Ford, GM Daewoo, Mercedes Benz.
Toyota Motor Vietnam (TMV) just announces officially to launch its 2010 Spring Seasonal Promotion Program since this middle February.
Accordingly, all its customers receiving cars within the period from February 17 to March 31, 2010 will get support of one year of physical insurance of car body amounting to equivalent 1.56 % of a listing retail price (exclusive of VAT).
Ford Vietnam on the other hand keeps unchanged its retail price on Everest, Transit and Mondeo models that will last until the end of first quarter this year.
Mercedes Benz Vietnam (MBV) whilst will keep unchanged its retail price on various cars until this March 1st, 2010 to stimulate its customers on the occasion of Tet festival to come.
Similarly, GM Daewoo VIDAMCO has the same moves.
Experts said that however the above-mentioned promotion schemes were just short-term solutions. So the auto market this year would remain to be unpredictable. Seemingly, the developments of auto market in early this year is quite similar to those happenings in the same period last year. Just after the first five months last year when the Government’s tax preferences took effect, the local auto market became flourishing.
Some opinions expect once the sale volume of automobile reduces dramatically, resulting in a reduction of tax contribution to the State Budget, the Government continues once again to have necessary support to the local auto-makers.
Though, local auto-makers have seen light at the end of tunnel. Some auto-makers are racing against time to launch strategic car models to attract customers. The per capita income of Vietnamese is improving, thereby leading to the purchasing power of cars for transport.
Furthermore, the existing recovery of global economic market will have positive impacts on the Vietnam macro-economic development in general and the local auto market in particular.
Auto-makers are still dreaming fruitful achievements of sale growth in the coming years as Vietnam is coming into the era of motorization. Recently, the Ministry of Industry and Trade forecasts Vietnam auto market to boom in 2015 with 166,000 to 235,000 units sold per annum and an expected yearly growth rate of 17 %.
However, the competition amongst local auto-makers, between imported cars and locally assembled ones is promising to become tougher and tougher. In the long-run battle for survival and development, there remain auto-makers that have right strategies.
Tags: Vietnam Auto makers, Vietnam automotive industry
Posted by VBN on Feb 4 2010. Filed under Automotive. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry
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