Support urged for auto industry

Viet Nam’s auto industry still needs Government support to develop a clear and long-term growth strategy, said the European Chamber of Commerce (Eurocham) in Viet Nam.

Despite the industry having great potential, it currently lacked a stable road map, Eurocham added.

At the launch of its White Book of Trade Investment Issues and Recommendations, Euro-cham said the domestic car manufacturing market consisted of new and used imported CBU (completely built up) units and domestically assembled CKD (complete knocked down) units.

The Vietnamese Govern-ment’s industrial policy and negotiations with ASEAN over export/import tariffs had been vital in promoting the domestic CKD market to its current position. CKD manufacturers are investors with a long-term commitment to Viet Nam and the domestic car manufacturing industry.Car sales decline 9% in November

HA NOI — Domestic automobile sales decreased by 9 per cent in November compared to the same period last year to 11,198 units, reported the Viet Nam Automobile Manufacturers’ Association (VAMA) yesterday.

This figure, the association said, was an increase of 777 units over October and 1,075 units compared to September.

“I think these figures are pretty good. Demand has increased compared with previous months,” said VAMA Secretary Pham Anh Tuan.

“However, it is still smaller than last year’s figure because in 2009, automobile costs were less thanks to a Government stimulus package,” he added.

Private car sales saw the biggest decrease, reaching only 3,770 in November, down by 16 per cent.

VAMA sales figure for the first 11 months of the year reached 99,978 units, down 4 per cent in comparison with the same period in 2009, of which sports utility, multi-purpose and cross-over vehicles decreased by 13 per cent, and commercial vehicles were down by 3 per cent.

In November, most members of VAMA saw downward trends in their sales.

Visuco (Suzuki) experienced a year-on-year decrease of 46 per cent, while GM Daewoo and Samco were down 37 per cent and 43 per cent respectively.

In November, Toyota Viet Nam sold just over 3,200 units, a year-on-year decrease of 7 per cent.

Experts attributed the decline to the devaluation of the Vietnamese dong and high interest rates.

“It will be difficult for domestic automobile sales to pick up before the end of the year if there is no assistance from the Government and the downturn may continue through the start of next year,” Tuan said. — VNS

The increasing production levels of domestic CKD provide an opportunity to Viet Nam to achieve a higher localisation rate for automotive parts. By attracting further investment into the automotive components industry, it will help the sustainable overall growth of the car industry.

However, development of the domestic industry was set to face a challenge due to the elimination by 2018 of ASEAN tariffs on cars imported into Viet Nam, said Eurocham.

“The elimination of tariff barriers will result in Vietnamese CKD manufacturers competing directly with established volume-based automotive assemblers based in Indonesia, Thailand and Malaysia,” the organisation said.

“It is important that the Vietnamese Government and the domestic auto industry for CKD and official importers for CBU work together to develop a clear roadmap for automotive industrial policy to cover the critical period up to 2018.”

“But such a roadmap can only be defined if relevant ministries and car-makers work closely together with one strategic goal in mind: the further development of domestic component suppliers and exports of cars to make Viet Nam a major ASEAN production-hub and export base.”

Eurocham recommended avoiding any tax increases or tax changes and commended the Government for maintaining the stability of tax policies affecting the automotive sector in 2011.

It said the Government should consider providing specific investment incentives for the development of a local supply chain for automotive components in Viet Nam.

The Government should consider supporting the CKD assembly industry by reducing the import duty on CKD parts to zero. This would give domestic assemblers the confidence to expand their production bases and enable them to better serve growing domestic demand.

This and additional regulations should also focus on boosting export possibilities for suppliers and auto manufacturers. — VNS

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