Viet­nam’s auto in­dus­try faces col­lapse risk: re­port

The China Post - - WORLD BUSINESS -

Viet­nam’s au­to­mo­bile in­dus­try faces the risk of col­lapse, with both con­sumers and man­u­fac­tur­ers shift­ing to im­ports, ac­cord­ing to the Tuoi tre (Youth) news­pa­per.

A res­i­dent of Ha Noi’s Cau Giay Dis­trict said he had de­cided to spend more than 600 mil­lion dong (US$28,570) on a five-seat Mit­subishi At­trage CVT, which is im­ported from Thai­land, de­spite study­ing do­mes­ti­cally as­sem­bled sedans.

“Af­ter testing sev­eral do­mes­tic cars my friends own, I be­lieve this im­ported one is more com­fort­able ... and its price is quite rea­son­able,” the un­named mo­torist added.

Im­ported cars have re­port­edly at­tracted more buy­ers re­cently, thanks to their bet­ter qual­ity. In par­tic­u­lar, the num­ber of ve­hi­cles from Thai­land is in­creas­ing, given the va­ri­ety of cat­e­gories and ad­van­tages re­lated to im­port du­ties that they of­fer.

Grasp­ing this trend in the last year, some man­u­fac­tur­ers grad­u­ally shifted from as­sem­bling to im­port­ing cars.

Vina Star Mo­tors ( VSM), a joint ven­ture of Viet­namese, Ja­panese and Malaysian firms in the south­ern prov­ince of Binh Duong and a sole dis­trib­u­tor of Mit­subishi ve­hi­cles in Viet­nam, is one such ex­am­ple.

Gen­eral

Direc­tor

of VSM Ka- zuhiro Ya­mana told Tuoi tre that the com­pany’s plant in HCM City’s Hiep Binh Chanh Dis­trict now fo­cuses only on as­sem­bling the Pa­jero Sport, rolling out about 100 ve­hi­cles per month, whereas this work­shop used to man­u­fac­ture 410 units ev­ery month.

In the last fis­cal year, be­tween April 2014 and March 2015, VSM sold 2,530 ve­hi­cles of dif­fer­ent kinds, with as many as 1,660 au­tos im­ported from Thai­land and Ja­pan.

“Although the to­tal sales re­flect only around 80 per­cent of our tar­get, the fig­ure rose by 59 per­cent from the pre­vi­ous fis­cal year,” Ya­mana pointed out.

VSM has re­port­edly im­ported the most num­ber of com­pletely built units (CBUs) among mem­bers of the Viet­nam Au­to­mo­bile Man­u­fac­tur­ers’ As­so­ci­a­tion (VAMA).

Ya­mana noted that his com­pany had care­fully con­sid­ered im­port­ing ei­ther CBUs or com­pletely knocked down items for do­mes­tic as­sem­bly, with the lat­ter hav­ing min­i­mized costs for con­sumers.

Heavy Price Dif­fer­ence

More­over, Gen­eral Direc­tor of Toy­ota Viet Nam Yoshi­hisa Maruta said in a meet­ing ear­lier this month that his com­pany now “stands at a cross­road,” as it will also have to choose be­tween main­tain­ing pro­duc­tion or shift­ing to im­ports, tak- ing into ac­count that tar­iffs on CBU im­ports in Southeast Asia will be 0 per­cent in the next three years.

In ad­di­tion, the VAMA re­vealed that it was un­aware of what sup­port poli­cies the gov­ern­ment will take to help au­tomak­ers con­tinue with their man­u­fac­tur­ing op­er­a­tions.

Ac­cord­ing to the cal­cu­la­tions of mem­bers of the as­so­ci­a­tion, car prices in Viet­nam are some 2.5 times higher than those in other ASEAN mem­ber states due to taxre­lated rea­sons, and this re­duces the com­pet­i­tive­ness of do­mes­ti­cally as­sem­bled ve­hi­cles.

Spe­cial con­sump­tion taxes alone have caused prices of the as­sem­bled cars to cost at least 5 per­cent higher than those of CBUs, Ya­mana re­vealed.

At a con­fer­ence held in Ha Noi on April 9, Chair­man of the Viet­nam As­so­ci­a­tion of For­eign In­vested En­ter­prises, Nguyen Mai, sug­gested a re­duc­tion in im­port taxes im­posed on car com­po­nents be of­fered.

“If th­ese taxes are not low­ered, Toy­ota and sev­eral other au­to­mo­bile en­ter­prises will cer­tainly have to turn to im­ports in the fu­ture. They will not be fools by con­tin­u­ing to im­port com­po­nents for as­sem­bly,” he re­marked.

Ac­cord­ing to Mai, Viet­nam has im­ple­mented strate­gies for the au­to­mo­bile in­dus­try since 1991, and now man­u­fac­tures about 120,000 ve­hi­cles per year.

In com­par­i­son, Thai­land also be­gan im­ple­ment­ing strate­gies for this sec­tor in 1991, but man­u­fac­tures about 2.5 mil­lion ve­hi­cles and ex­ports 1.45 mil­lion units ev­ery year.

Fur­ther­more, sources of Tuoi tre es­ti­mated that the av­er­age price of five-seat cars im­ported by Viet­nam from Thai­land will fall from US$24,750 in 2015 to US$16,500 in 2018.

An of­fi­cial of the Min­istry of Fi­nance told the news­pa­per that the agency was co­or­di­nat­ing with the Min­istry of In­dus­try and Trade to seek mea­sures to re­duce im­port taxes on car com­po­nents.

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