Abstract
The slowdown in Vietnam' s new vehicle sales, which began in the latter third
of 2008, has continued into
2009 and suggests that the industry faces a
difficult year ahead. BMI' s recently published Vietnam Autos
Report also
studies the impact of various taxes on sales, including the new Special
Consumption Tax
(SCT) rate, which will be introduced on April 1. The
Vietnam Automobile Manufacturers Association
(VAMA) and the Ministry of
Industry and Trade had asked the government to defer the new rate until
the
industry had stabilised, but the request was rejected. However, the
Finance Ministry has agreed to reduce
the tariff on imported parts and
engines with a view to supporting domestic production.
It is unlikely that
the government will achieve its industry target of producing 240,000 annual
vehicles by
2010. Manufacturers have been forced to cut production in
order to accommodate the slump in sales. In
January alone, sales fell by
68% year-on-year (y-o-y) to 3,852 units. Commercial vehicles recorded the
biggest drop of 84% to 1,239 units. Passenger car sales were down 40% from the
same month last year at
1,258 units, while the sports utility and
multi-purpose vehicle (SUV and MPV, respectively) segment
contracted 38%
to 1,355 units. This has prompted BMI to revise its sales and production
forecasts for
2009 downwards, anticipating the introduction of the higher
SCT.
BMI considers Vietnam an example of a market on the rise, which is
reflected in our Business
Environment Ratings for the automotive industry
in the Asia-Pacific region. The newly liberated autos
market has witnessed
stellar growth, and with an above-average rating for its potential over the
next five
years, further increase should be maintained despite a slowdown
in the latter months of last year. The
high score for Vietnam' s
competitive landscape reflects its newfound freedom following an earlier
reduction of tariffs on imported vehicles, while the regulatory environment
also scores highly thanks to
new environmentally focused legislation aimed
at taking older trucks off the roads. We expect to see the
region climbing
the ratings; it is currently 10th with a rating of 47.3 out of a possible
100.
The number of international brands in the Vietnamese market is
testament to its potential, although all of
these are to suffer equally in
2009. VAMA members recorded negative sales growth in January.
Underlining
the slump in the commercial vehicle segment, domestic truck manufacturer
Vinamotor saw
sales drop by 87% y-o-y to just 373 units. Market leader
Toyota Motor' s sales fell 42% to 1,059 units,
while its nearest
competitor, GM Daewoo Vietnam (Vidamco), registered a 49% drop in sales to
511
units.
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