In any angle of product, sedan seems to be the apparent face of the Vietnamese automobile industry. Not only sedans
Conventionally, the automobile industry is usually referred to cars of less than 10 seats by many people, even professionals. The time when carmakers are granted manufacturing licences and start operations is referred to the starting point of the industry.
To a certain extent, that is sort of emotional recognition considerably affected by the desire of Vietnamese people to possess this sort of upmarket transport means and the desire of policymakers to have a super industry, automobile industry.
Meanwhile, many people forget, intentionally or unintentionally, that the automobile industry is not only made up by only the sedan but also a variety of extremely important means to the economy, or to be more specific, production and business activities of the business community, business households and individuals. Such other means include trucks, vehicles for special purposes, and passenger cars (more than 10 seats).
Because of this point of view, Vietnam’s automobile industry used to be regarded as a burden after two decades of enjoying many privileges and cares from protectionist policies.
And, if we only look at the sedan segment, the automobile industry of Vietnam is actually doomed to failure, a real failure, especially when it is placed in the picture of development objectives written in the automobile development strategy and plan to 2010, with a vision to 2020.
Now is 2014. It is less than four years before import taxes on CBU (completely built unit) cars from Southeast Asian nations are brought to 0 percent.
Problematically, automakers in Vietnam are still squirming with simple assembly processes. Localisation ratio in assembled in Vietnam cars is very low, except for some models like Toyota Innova with a locally sourced component ratio of 40 percent or so.
Meanwhile, other ASEAN countries like Thailand and Indonesia have strongly emerged to be leading automobile manufacturing centres in the world. They are exporting automobiles to the world where Vietnam is a potential market with a population of over 90 million and a very low car-to-people ratio.
Foreign-led car joint ventures also admitted that Vietnam would impossibly develop the automobile industry with sedans being the flagship in the next four years. Even, there was a warning that Vietnam would have only three foreign-led carmakers with production bases in the country by 2018.
If the Vietnamese automobile industry lacks breakthrough changes, the remainders will be fewer.
Commercial vehicles are the cure
Clearly, auto production in Vietnam is in a dilemma. It is being pinched by tariff reduction roadmaps according to integration commitments on the one hand and personal car control policy – a result of insufficient and poor infrastructure – on the other. Worse, Vietnamese people are still keener on foreign-made automobiles than locally made ones.
Meanwhile, trucks and buses hold enormous advantages.
First of all, commercial vehicles do not face as heavy pressure as imported vehicles like sedans. For example, Vietnam will have to slash import tariffs on completely built cars from Southeast Asian nations to zero by 2018. This is very much worrying manufacturers of cars with less than 10 seats.
With right stimulus policies, the auto industries of Thailand and Indonesia are growing very strongly. Notably, they primarily make cars with less than 10 seats, not trucks and buses. So, their worries about AFTA can be totally eliminated.
In fact, policies on auto industry are still creating best mechanisms for domestic manufacturers. Specifically, high tax rates on locally manufactured and assembled made vehicles are being imposed.
According to import tariffs specified in the Circular 193 dated November 15, 2012 issued by the Ministry of Finance, import duties on passenger vehicles of 10 seats or more are levied at 70 percent, equal to that on vehicles of less than 10 seats. Trucks are subject to 10-62 percent tax rates, depending on loading capacity. Trucks with lighter loading capacity are imposed higher tax rates.
When ASEAN bloc where Vietnam is a member signs free trade agreements with China, South Korea and Japan – all have developed automobile industry), buses and common trucks are no longer subject to preferences. Accordingly, import duties on these vehicles will be applied as stated in Circular 193.
Remarkably, these products are not the targets of attack of foreign automobile manufacturers and importers. Let alone, domestic companies are quite successful with these product lines.
Among 56 automobile manufacturers in Vietnam now, bus and truck makers like Truong Hai, Vinaxuki, Samco, Vinamotor and VEAM are controlling the market. Fair enough, trucks and buses are helping Vinaxuki and Truong Hai to sustain development and nurture the ambitious dream of making sedans or hatchbacks.
Previously, some experts suggested that, instead of trying to make a Vietnamese sedan, automakers should focus on researching and manufacturing trucks and buses.
They argued that why Vietnam did not focus on what we were good at instead of trying to raise the localisation ratio in cars with less than 10 seats. Indeed, Vietnam was hoped to bring the localisation ratio to 40 percent in cars assembled in Vietnam in 2010 while the actual rate was just 5 percent. Meanwhile, it is easy to raise the ratio in buses and trucks to over 50 percent.
According to the new automobile development strategy to 2020, with a vision to 2030, the Ministry of Industry and Trade has drafted fundamental changes to the focus on vehicles. Vietnam will focus on manufacturing midsize and small trucks, passenger cars and vehicles for special purposes (concrete mixers, tanks, etc.) The strategy also mentions Vietnam’s ambition to become a supplier for global automobile value chains.
VNE
Đăng ký: VietNam News
