VietNamNet Bridge – The two big Japanese automobile manufacturers -- Nissan and Honda, accidentally chose June 11 as the day to introduce their new low cost sedan models Nissan Sunny and Honda City.

Honda and Nissan enter low-cost market segment

Not only having launched the first domestically assembled Nissan Sunny, the Malaysian Tan Chong Group, the franchisee of Nissan in Vietnam, has also opened the $40 million Nissan model automobile assembling factory in the Hoa Khanh Industrial Zone in the c central city of Da Nang. This is the first Tan Chong’s factory overseas, besides its two factories in Malaysia.

As such, Nissan has decided to transfer the technology to Tan Chong, but it does not contribute capital to the project in Vietnam. And it has also decided not to join hands with a Vietnamese partner to bring Nissan cars to Vietnam.

In fact, Nissan has every reason to make such a decision. The Malaysian group has been the exclusive distributor for Nissan’s products in Malaysia and Singapore over the last 50 years. It now also serves as the exclusive distributor for Nissan in Indochina.

In November 2011, Tan Chong officially became the partner in the $10 million joint venture after buying 74 percent of stakes from the Danish Kjaer Group A/S.

After that, the Malaysian group poured another $40 million to build up a Nissan assembling factory in Da Nang which has the production capacity of 6.500 products per annum. The capacity is expected to hit the maximum level of 30,000 products per annum after five years of operation.

Also on June 11, Honda Vietnam launched Honda City into the market. The automobile manufacturer has been present in 91 countries and territories in Asia, Africa, the Middle East and Europe.

Honda City is assembling  the car parts from Japan, Thailand and some other countries. Honda plans to sell 1,000 cars right in 2013.

Meanwhile, Hyundai Thanh Cong, the car distributor, has confirmed it has begun importing and distributing Hyundai Elantra 2013, a low cost model, in Vietnam.

The lucrative market segment

Both Nissan and Tan Chong said the official selling prices of their newly launched models would be made public on June 17. However, a source said the models are priced at between VND540 million and VND620 million.

About the pricing policy, Ang Bon Beng, a senior executive of Tan Chong, said with an aim to cement its firm position in the Vietnamese market, Nissan has accepted the 10 percent subsidy for Sunny.

Meanwhile, with the prices of VND540-580 million, Honda is believed to have big advantage in competing with other rivals in the low cost market segment.

The Q4 2012 report of Business Monitor International showed that the number of Vietnamese families in the three biggest cities of Hanoi, Da Nang and HCM City, with the monthly income of $1,000 a month accounts for 5 percent of the local populations. This would be the potential clients that low cost car models target to.

Tomohiro Maruno, Sales Director of Honda Vietnam, said in the current economic difficulties, it’s the time to target the clients with moderately good income, who cannot access the models priced at over VND1 billion.

He said that on the car model launching day alone, Honda Vietnam signed 200 contracts on car sales with clients.

NCDT