April car sales up, but producers worry

The month's sales figures released by Vietnam Automobile Manufacturers Association (VAMA) showed that nearly 18,200 units were sold in the domestic market, marking an increase of 11% from March this year and 60% from the same period last year.

A total of 9,423 passenger cars and 8,755 commercial vehicles were sold in April. Domestic carmakers assembled 13,980 units, 9% higher than the previous month, while 4,198 units were imported, a rise of 19% compared with the month before.

The April figures have helped increase the total sale of more than 66,900 units in the first four months of this year, up by 62% versus last year.

Of the total sales, the VAMA members together sold 16,643 units, 9% and 65% more than they did in March this year and April last year, respectively. The figures brought the total sales to 57,477 units in the first four months of this year, 68% higher than the same period last year.

Truong Hai Automobile JSC (Thaco) is one of the major automakers to take the lead in the market; with 36.9% market share and selling 21,324 cars in the four months, it made a year-on-year gain of 97%.

Toyota Motor Vietnam retained its second position with 25.9% market share and a growth of 43% compared with the same period last year. Ford Vietnam took the third and Honda managed the fourth position with 9.7% and 4.2% market share, respectively.

While the market has been recording an increase in sales from the beginning of this year, the question how to boost the domestic automobile industry when the 2018 import tax on cars from ASEAN countries drops to zero has been raised at many automobile events held recently.

Complete knockdown

During a dialogue on policies for Vietnam's automobile industry development, held by the Ministry of Industry and Trade's Heavy Industry Department two weeks ago, Chairman of Thaco Tran Ba Duong said the domestic market in the recent years had been of locally-assembled cars, or complete knockdown (CKD) units. Hence, businesses that strongly invested in CKD, their distribution and servicing, occupied the market.

Duong noted that by 2018, when import tax on cars will be zero per cent, cars will become much cheaper. If imports replace locally manufactured units, the price of cars can be cut by 5% of import tax on spare part.

He remarked that domestic carmakers would have to cut their production costs by 15%-20% in all phases, from production to distribution and sales, to offer their products at competitive prices.

President of VAMA Yoshihisa Maruta, who is also General Director of Toyota Motor Vietnam, said a 0% import tax would affect domestic car production, and therefore, it would become important to provide more support for domestic automobile development. Other ASEAN countries such as Thailand and Malaysia had supported automakers by providing them with "special tools" to boost domestic production.

He emphasised that with a population of more than 90 million, the Vietnamese market had the potential and ability to develop as strongly as Thailand.

Maruta said the VAMA members hoped to continue manufacturing in Vietnam. The association members would send a proposal on policies to the government this month.

Deputy Minister Tran Tuan Anh confirmed the government's view on the automobile industry's important role in the nation's industry development strategy.

According to Anh, the domestic industry has the capacity to manufacture and assemble about 460,000 units per year. However, it has not met all the criteria for becoming a real automobile manufacturing industry; the domestic spare part production is still low at 15% to 50%.

The main reasons are that the country's industry was born much after other regional countries, the development of support industry and transport infrastructure have not been synchronized, and that the people's living standard is not high.

Concluding the dialogue, Tuan Anh noted that the participants' ideas were useful for management bodies, especially for creating policies and strongly establishing the country's automobile industry by 2020 and a vision for 2030. The ministry and relevant sectors would continue to draw strong policies that would help boost the domestic car production effectively in the future.