Truong Hai Auto Company (Thaco) will enter 2018 with a fiercer level of competition, when the import tax on many cars from ASEAN will be 0%.
Along with that, excise tax by cylinder capacity will also be reduced. All of which give consumers the mindset of waiting for car prices to continue to fall further this year. In fact, in the past year, prices of many models have decreased. Typically, the 5-seat Chevrolet Spark LS passenger car is from 339 million dong to 269 million dong. KIA, Thaco’s flagship model, has also returned to VND 295-394 million after many adjustments. Hyundai Thanh Cong cars, after being converted from import to domestic assembly, have continuously decreased. As a result, the Hyundai Grand i10 car has decreased by an average of 40-60 million VND / car, about 315-415 million VND (11.2017). Small cars of Mitsubishi, Nissan, Toyota … also decreased at the same rate. Hotter than the story of discounted cars is the phenomenon of Thai cars, Indonesian cars … massively pouring into Vietnam, increasing competition pressure.
In this context, Thaco’s business has been deteriorating. In the first 11 months of 2017, according to published data, Thaco’s sales volume was only 81,102, compared with nearly 113,000 cars sold in 2016. As a result, Thaco’s market share decreased, from 41.1%. in 2016 to 35.7%. Net profit in the third quarter of 2017 also decreased by more than half over the same period. In a sharing with the press, Mr. Tran Ba Duong, Chairman of Thaco, admitted that Thaco’s 2017 decline in growth was out of initial prediction.
This is also the general situation in many other auto assemblers. According to the Vietnam Automobile Manufacturers Association (VAMA), sales of locally assembled cars in the first eleven months of 2017 decreased by 19%. In 2018, when the door of integration was opened, Mr. Tran Ba Duong acknowledged that the domestic auto industry had to change. In terms of policy, from this year the auto industry will suffer many impacts.
Decree 125/2017 with high or even double tariffs for imported used cars is expected to hinder or put an end to this segment. Or Decree 116/2017 will tighten the management of enterprises that assemble or import new cars, such as requiring companies that import cars to have car warranty and maintenance facilities in accordance with standards (can go rent), have a power of attorney to recall from a foreign manufacturer, have a type quality certificate from the place of manufacture, must commit that components and spare parts are in accordance with vehicle standards … These regulations are expected to screen players in the market.
But companies with large market shares such as Thaco will gain more advantages and take advantage of policy incentives. Another advantage for Thaco is that the Government has given component tax incentives to 0%. However, according to Mr. Tran Ba Duong, the important thing is that businesses need to have a long-term strategy, apply 4.0 technology to survive and compete. Thaco’s strategy for 2018 is that most products will be converted to assembly. In preparation, from March 2017, Thaco has expanded its Mazda car production and assembly plant and is expected to put into operation in April 2018. Thaco’s goal is towards mid-end and high-end cars.
Thaco has a policy of producing and distributing a variety of brands, spanning all segments, with passenger car brands from KIA, Mazda, to luxury cars rather than Peugeout, and luxury cars with BMW and MINI. In the commercial vehicle segment, Thaco has signed a contract with Fuso. Both BMW, MINI and Fuso are car manufacturers that Thaco has recently cooperated with. Previously, when Euro Auto was not involved in the paper fraud scandal, the company helped BMW and MINI to achieve steady growth of 30-40%.
Fuso alone also has a volume of cars sold in the first 11 months of 2017, accounting for about 13.7% of the market share of Mercedes-Benz Vietnam (MBV). For the Peugeot line, Thaco also signed a contract with PSA (France) to receive the production technology transfer and assembly of 2 new models (Peugeot 3008 and 5008). Mr. Tran Ba Duong said that this diversified assembly and distribution method can attract customers, make a difference for Thaco and easily persuade partners to participate in the Company’s display chain.
But in order to pursue the strategy of focusing on the mid-high-end segment, it is expected that in 2018, Thaco will continue to make changes in partners, change technology and scale to bring relatively high-end products to market. school.
If Thaco changed its strategy, Hyundai Thanh Cong would not stand still. Hyundai Thanh Cong becomes the only unit that assembles and distributes Hyundai commercial vehicles in Vietnam. In the first phase, Hyundai Thanh Cong’s factory has a capacity of 42,000 vehicles / year, not only for domestic service but also for export by the end of 2018.
For Toyota Vietnam, the strategy throughout 2017 is continuous deep discounts, promotion husband promotions. As a result, Toyota’s sales surpassed Thaco, its market share also increased, from 20.5% in 2016 to 23.6%. In early 2018, Toyota still pursued a price reduction strategy. In addition to vehicle assembly, Toyota began to jump into importing vehicles in ASEAN, such as importing Yaris from Thailand and Fortuner from Indonesia. Toyota also plans to import a new cheap version of the Wigo and Fortuner. However, Decree 116 could hinder this move for Toyota.
However, Toyota, Hyundai or the presence of many other names and imported cars have continuously put pressure on Thaco to compete, making Thaco’s growth problem in the automobile segment not simple. Can Thaco seek opportunities in other areas to compensate?
According to the plan, the real estate business is expected to contribute more to Thaco’s profits from 2018. Thaco currently owns 90% of the capital of Dai Quang Minh, the investor of the 257ha Sala Luxury Urban Area in District 2. Quarter In March 2017, Thaco’s real estate revenue reached more than VND 530 billion, a significant increase over the same period.
However, compared to the real estate inventory of over 10,000 billion dong, according to the semi-annual report of 2017, Thaco has yet to record much from real estate. The Sala urban area was built in 2013 but according to the construction progress in mid-December 2017, only the Samiri and Sarica apartments have been handed over, the remaining Saroma villas, the Sadora luxury apartments, Sarina, the high-rise office – commercial center – service IIA, Sala park … are still incomplete.
Dai Quang Minh has been selling since May 2015. But except Samiri is announced to sell out, and in other areas, the developer does not disclose information. However, a year after the first product launch date, Dai Quang Minh said it had sold more than 1,200 out of nearly 1,900 apartments, townhouses, and villas of all kinds.
* Source: Investment bridge