But the manufacturers are still planning to export cars. Contrary to all predictions, domestic production has been growing despite the tariff cuts which paved the way for imports to flood in Vietnam.

Surprisingly, the sales of domestically assembled products in 2018 were higher than sales of CBU (complete built unit) imports, though CBU imports are getting cheaper.

According to the Vietnam Automobile Manufacturers’ Association (VAMA), 288.683 cars were sold in 2018, an increase of 5.8 percent over 2018. Of this, 215,700 cars sold were assembled domestically, up by 10.6 percent, while sold imports were one-third, approximately 73,000, a decrease of 6.2 percent compared with 2017.

The growth of the automobile market last year heavily depended on sedans, which are the  least competitive product with imports from Thailand and Indonesia, which are now taxed zero percent. 

Citing figures to prove that Vietnam-assembled cars are still more attractive to consumers than imports, an analyst commented that Vietnam needs to be ‘cautiously optimistic’ about the achievements.

He said the satisfactory sales of domestically assembled cars in 2018 did not mean that domestic products were more competitive than imports.

Domestically assembled products sold well partially because of policy. The strict requirements stipulated in Decree 166 made it difficult for foreign-made products to penetrate the Vietnamese market.

Despite the decrease in both luxury and import taxes, the prices of imports did not fall significantly as expected. Therefore, domestic products were the choice for many consumers.

ASEAN market

Some Vietnamese automobile manufacturers now want to export sedans to regional markets.

Truong Hai Auto (Thaco), for example, plans to export $60 million worth of products this year. In the immediate time, it will export Kia Sedona to Thailand, which is called ‘Southeast Asia’s Detroit’.

A representative of Hyundai Thanh Cong also said the factory in Ninh Binh province will make products not only for domestic consumption, but also for export to regional countries. 

In 2019, Hyundai Thanh Cong plans to export Hyundai Grand i10. The company previously imported Hyundai Grand i10 in CBUs from India.

At that time, the locally made content only accounted for 10 percent. However, the representative said, the figure would be at least 40 percent in 2019.

Vietnam imported 81,600 cars worth $1.8 billion in 2018, down nearly 16 percent in quantity and 20 percent in value compared to the year before.

RELATED NEWS

The highlights of the automobile market in 2018

TMV marks 11% increase in 2018 car sales

Tran Thuy