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Vietnam Autos Report Q4 2012
Business Monitor International, August 2012, Pages: 48
The Vietnam Autos Report provides industry professionals and strategists, corporate analysts, auto associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Vietnam's automotive industry.
This year (2012) is proving a very difficult one for new vehicle sales in Vietnam. Indeed, new vehicle sales over the first half of the year have fallen by 41% year-on-year (y-o-y), to just 42,928 units, according to the Vietnam Association of Automobile Manufacturers (VAMA). Sales by VAMA member automakers totalled just 35,694 units (excluding bus chasses) for H111, with June sales by VAMA members falling by 24% y-o-y, to 5,858 units.
The main reason for the slide in new car sales has been the sharp increase in vehicle registration taxes imposed by the government since the start of the year, which has stifled demand for new vehicles. In addition, interest rates on car loans remain very high (at around 20%), despite recent cuts to benchmark interest rates, making it very difficult for Vietnamese consumers to afford car loans.
Against this discouraging backdrop, BMI believes the time is now right to make a further downwards revision to our forecast for 2012 new vehicle sales in Vietnam. We now feel that a 26.4% fall in sales is the most likely outcome, to 80,996 CBUs. This forecast falls in line with VAMA’s view that 2012 sales will total around 80,000 CBUs, implying a return to sales levels last seen in 2007. Passenger car sales will fare worse than commercial vehicle sales this year. We are targeting a 31.2% drop in passenger car sales, to 44,036 CBUs, but only a 20% drop in commercial vehicle sales, to 36,959 CBUs.
Looking forward, much will depend on the attitude of the government and whether it chooses to continue with the collection of three new charges, one of which - the road maintenance fee – reportedly came into force on June 1 2012. So far, the Ministry of Transport (MoT) has not outlined any timeframe for implementing the other two tariffs – a fee on personal vehicle users and a charge for cars entering the downtown area of cities in rush hour. However, the chairman of VAMA, Laurent Charpentier, has stated that 'this does not mean it will not eventually collect the fee'.
On the production side, we have also become more negative since our last quarterly update, in light of a March 2012 report produced by Vietnam's Chamber of Commerce and Industry (CCI), which has highlighted structural weaknesses in the country's auto sector, which will ensure a reliance on imported vehicles (see Production section for more information). This compounds the ongoing threats to the demand side of the industry, which BMI believes will create tougher conditions for carmakers.
For 2012, BMI now believes that a 15% fall in output is the most likely outcome, reflecting the increased uncertainty surrounding the Vietnamese auto sector at the present time. Beyond the current year, we are still targeting steady growth in production (in the order of 7% per annum) over the 2013-16 period.
However, this is based on foreign manufacturers such as Hyundai Motor and Kia Motors maintaining their current investment plans to increase auto and auto parts production within the Chu Lai Economic Zone towards the end of our forecast period. Should such foreign manufacturers choose to reconsider their Vietnamese investments in the light of recent tax and registration fee hikes then there may well be downside risks to our current 2013-16 production forecasts moving forward.
Executive Summary 5
SWOT Analysis 7
Vietnam Autos Industry SWOT 7
Vietnam Political SWOT 8
Vietnam Economic SWOT 9
Vietnam Business Environment SWOT 10
Global Overview 11
Table: Passenger Car Sales H112 11
Industry Risk/Reward Ratings 15
Table: Business Environment Ratings – Autos Industry Asia Pacific 18
Regional Overview 19
Rising Car Ownership Brings Insurers To EMs 19
Macroeconomic Forecast Scenario 21
Table: Vietnam - Economic Activity 23
Industry Forecast Scenario 24
Table: Vietnam Autos Production, 2009-2016 24
Table: Vietnam Autos Sales 2009-2016 26
Table: Vietnam Autos Trade, 2009-2016 30
Competitive Landscape 32
Table: New Vehicle Sales By Top 10 VAMA Members (CBUs) 32
Table: Top 10 Best Selling Cars In Vietnam In 2011 33
Commercial Vehicles 35
Company Monitor 38
Asia Grows In Importance For Faurecia 38
Company Profiles 40
Company Profiles 40
GM Vietnam (formerly Vidamco) 40
Mercedes-Benz Vietnam 41
Country Snapshot 42
Table: Vietnam's Population By Age Group, 1990-2020 ('000) 43
Table: Vietnam's Population By Age Group, 1990-2020 (% of total) 44
Table: Vietnam's Key Population Ratios, 1990-2020 45
Table: Vietnam's Rural And Urban Population, 1990-2020 45
BMI Methodology 46
How We Generate Our Industry Forecasts 46
Automobile Industry 47