Car market has room to zoom ahead

With modest car ownership rates, Vietnam’s car market offers multiple opportunities for development.

There were 1.6 million automobiles in circulation in Vietnam as of December 31, 2010, up 110,000 units or 7.5 per cent against 2009, according to Ministry of Industry and Trade (MoIT) figures. Automobile growth in Vietnam averaged 12.8 per cent, per year during 2001-2010.

Current car ownership of 18.7 units per 1,000 residents was low and tantamount to Thailand’s level 15 years ago, said deputy head of MoIT’s Research Institute for Industry Policy and Strategy Pham Van Liem.

Also according to institute appraisals, locally-made passenger cars and trucks have a leading competitive edge in the domestic market, following by less than nine-seater vehicles. Sales of competitively priced vehicles from four to nine-seats sharply rose in the past years and this was an important and potential market segment to car assemblers and manufacturers.

However, to boost the local industry development and encourage car manufacturers to raise the localisation rate the Vietnamese government should present concrete, inter-connected and long-term development policies towards the car industry, said Ford Vietnam general director Laurent Charpentier.

Large local car manufacturer Truong Hai Auto Joint Stock Company’s general director Tran Ba Duong said auto policies’ constant changes had driven local auto manufacturers into a spin.

Duong said more tax incentives would be needed to spur auto supporting industry development.

“If the tax policies are more stable, more investors will jump into the car industry, giving premises to heighten the localisation rate and making local car manufacturers more engaged in the global value chain,” Duong said.

The MoIT figures show that around 95 per cent of over 10-seater vehicles and 77 per cent of trucks in Vietnam are made by domestic and foreign-invested auto firms. Figures for locally-made less than nine seater vehicles and specialised vehicles were 64 per cent and less than 10 per cent, respectively.

For instance, in 2010 Vietnam Automobile Manufacturers Association members turned out 112,224 vehicles against an imported volume of 53,841 vehicles. Corresponding figures in the first five months of 2011 were 44,966 vehicles and 26,900 vehicles.

Imported car growth averaged 20.6 per cent per year in volume and 23.9 per cent, per year in value during 2001-2010, nearly double growth in locally-made cars in the same period (around 11.4 per cent, per year).

Imports of less than nine-seater vehicles shot up the strongest averaging 51.6 per cent, per year while that of trucks rose slightly 2.9 per cent and of more than 10 seater vehicles 13 per cent, per year. – VIR

Tags: Vietnam automotive, Vietnam automotive industry, Vietnam autos market, Vietnam car sales