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Imported cars rejoice, domestic cars worry about breaking

The “tsunami” of imported cars was warned

Decree 17 will come into force from March 22, 2020 and with what the imported cars have “spectacularly overcome” in 2019, it is not difficult to envision the picture of Vietnam’s automobile market. This year when the new business season officially restarted less than months.

Looking back at 2018, the start of implementing the import tax on cars from ASEAN reduced to 0% under the ATIGA Agreement but an immediate “barrier” was in effect in Decree 116 with the requirement for batch car inspection. and the importer must provide a type certificate from the manufacturer. This barrier made the imported cars leveled off. If in 2017 there were about 94,000 CBU cars to Vietnam, then in 2018, the figure was 81,609 units, down 16.1%. But at the end of 2019, imported cars recovered and were “better” with 142,000 units, up 71%.

The above-mentioned “terrible” growth figures despite the barriers of Decree 116 show the attraction of 0% import tax. Vehicle imports are mainly from Thailand and Indonesia. The car manufacturers after one year of 2018 have struggled to solve the paperwork by themselves and bumper of imported cars. Take an example such as Toyota Vietnam (TMV). At the Vietnam Business Forum (VBF) mid-term 2018 on July 4, TMV representative, General Director Toru Kinoshita lamented that Decree 116 has caused destabilizing markets, imported cars are difficult to return, businesses Take time to do paperwork. In 2018, TMV consumed 13,200 imported cars, down 26% compared to 2017. But this FDI-owned enterprise improved the volume of imported cars to more than 29,200 units last year, growing by more than 121%.

Imported cars rejoice, domestic cars worry about breaking

Mitsubishi Xpander accounts for 75% of the imports of the Mitsubishi Motor Vietnam joint venture, which is a powerful evidence for the attraction of 0% import tax incentives.
Another company, Mitsubishi Motor Vietnam, also shocked the market when the number of imported cars in 2018 was only about 6800 units.In the end of 2019, this business sold more than 26,800 units. Imported vehicle growth is up to 294%. In particular, Mitsubishi Xpander model alone accounted for 75% of the company’s imported cars consumed.
Two examples of two brands, Toyota – one always in the Top 5 bestsellers in the market and Mitsubishi – first reached the Top 5 showing the attractiveness of import tax incentives. Therefore, when the “door” of Decree 116 is investigated “the key” of Decree 17, cars imported from ASEAN spill over are more easily visible.

In addition, the change from Decree 17 to eliminate type quality certificates also helps cars imported from other markets easier.

Talking to the representative of Audi Vietnam, who lamented that, for 2 years, the media communication plan was really busy only in the last quarter of the year when there was an exhibition and in the year of “sitting and playing” because there was no new car. The difficulty of type certification is detrimental to some brands, as some countries do not issue it to businesses. Thanks to Decree 17, all difficulties in importing vehicles were dissolved.

Mr. Do Minh, an automobile expert who is currently working at a big car company importing from Germany, said: “Previously, in order to prepare a car model to launch domestically, we needed to prepare for 6 months. not to mention the delivery time for affected cars in batches. Now the preparation time will be reduced to 5 months, and an unaltered model will be quickly imported to customers ”.

The “tsunami” caused by massively imported cars is present and foreseen, directly affecting the locally assembled vehicle segment, which accounts for about 67% of the market share.

The pressure on “domestic cars” is increasing

Proactive supply is the reason that many domestic automobile businesses are maintaining assembly such as TC Motor (97%), Truong Hai (Mazda, Kia, Peugeot mainly assemble), Toyota (63%). ), Mercedes-Benz …. These are also brands with a large market share.

The market share is also the wire connecting businesses with production plans, but that rope is forecasted to be very fragile.

After 2018 growth of 10.6% (data from VAMA), in 2019, “domestic” cars fell by 12% due to pressure from imported cars. Some businesses claim to re-assemble “hot” models such as Toyota with Fortuner, Mitsubishi will produce Xpander in Vietnam in 2020 to meet growing demand. But plans may change based on business situation. Typically, Toyota Vietnam has stopped assembling Camry model after nearly 2 decades of maintenance.

The pressure from reduced sales caused a long-standing ‘traditional’ car model such as the Toyota Camry to also import.
The year 2019 is different from the years before the exciting discount race only occurred in assembled cars, the reduction of imported cars was reduced in some “dull” models. By the end of the year, many dealers with assembled cars accepted cutting interest, even selling below the imported price to accelerate inventory. That is the real challenge coming from the increasing supply of imported vehicles.
Sharing with the reporter, Mr. Le Ngoc Duc, General Director of TC Motor Company, said that cars imported from ASEAN are dominating domestic assembly cars. “Assembled cars currently offer a maximum discount of only 12-15%, but imported CBU cars can be reduced by 23-25%,” Mr. Duc said.

From the second quarter of 2020, the rule of batch inspection will cease and the last “shield” of protection for locally assembled cars will disappear, causing the current market share between assembly and import to reverse. .

Vinh Nam automobile expert, who has long experience in the field of car sales, said that many cars coming here will not reduce prices, but the pressure on assembled cars is not small. “Imported ASEAN cars do not reduce prices but the equipment has increased quite a lot. Easier car clearance time from Europe will also contribute to increasing consumer choices, ”Mr. Nam said.

Sharing the view that assembled cars will be under considerable pressure because imported cars will be richer, Mr. Truong Tuan Dung (Doi Can, Hanoi), a man who has exchanged many German, Japanese and Korean cars, said: Assembly cars are very slow to change models. New version of the world has been out for 2.3 years, Vietnam will have a new vehicle. If the imported cars quickly update the models and many new equipment, I will be inclined to switch to imported cars instead of assembling them, even if domestic car prices are lower. ”

Vietnam is fast growing to become the region with the most developed auto market in the region, with a forecasted scale of up to 1 million vehicles / year by 2025. The automotive industry has also long been placed in the strategy by the Government. national industrial development. Over the past 20 years, many policies have been proposed to support the development of domestic automobile production, but the automobile industry is still stuck in the problem of small market capacity.

At present, domestic automobile enterprises only rely on the proposal of special consumption tax exemption for the domestic added value as the most feasible solution to the Vietnamese automobile industry first. fears of an upcoming imported car tsunami. But so far, this proposal has not been put into practice.

At a regular government press conference in December 2019, Deputy Minister of Industry and Trade Do Thang Hai acknowledged that the current difficulty of Vietnam is the deep integration and the signing of many free trade agreements (FTAs). Therefore, there is not much room to support the domestic automobile industry.

Source: Vinamnamnet


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