AUTO MARKET GEARS UP
Although Vietnam’s automobile market is considered too small, it proves to be very attractive: several more big names in the world are seeking ways to enter Vietnam.

Only several automobile brand names have arrived in emerging economies like China and India. Meanwhile, the number of automobile manufacturers is much higher in Vietnam, a very small market.

Japan’s Daihatsu and Germany’s BMW recently left Vietnam after a long time of staying here. However, BMW has returned just after a short time: it sells cars in Vietnam through the distributor Euro Auto. Meanwhile, Daihatsu’s representative also said that the manufacturer would come back at the appropriate time.

According to Euro Auto, the company has received a lot of orders since it announced it would distribute BMW cars. The Kia Morning is selling very well in the southern market, while Hyundai cars are also favoured by customers. The appearance of Porsche cars is hoped will help make the market more bustling.

Most of the biggest names in automobile manufacturing have arrived in the small market of Vietnam, including Mercedes Benz, Toyota, Honda, Ford, GM, Isuzu, Mitsubishi and Suzuki. Meanwhile, other big manufacturers are eyeing the market.

German manufacturer Volkswagen in March 2007 registered to set up a plant in Vinashin-Shinec Industrial Zone in Hai Phong city in the north, which would have the investment capital of $120mil.
The Mechanics, Metallurgy and Mechanicals Department under the Ministry of Industry and Trade has revealed that two manufacturers have applied to make vans and commercial vehicles in Hai Phong and Vinh Phuc provinces.

A source told Thoi bao Kinh te Vietnam’s reporter that Lotus group from the UK, which specialises in making sports vehicles, had also expressed its desire to join Vietnam’s market. Lotus’ representative is going to have meetings with relevant ministries’ officials next week to discuss the steps Lotus has to take to penetrate the market.

The world’s big automobile manufacturers came to Vietnam right in the early 1990s to set up plants for making cars for domestic consumption. Within 6-7 years, a series of automobile joint ventures had been set up, which then gathered under the banner of the Vietnam Automobile Manufacturers’ Association (VAMA).

The operation of the existing joint ventures is considered not as successful as expected. Several joint ventures even have announced losses. However, no one can deny that Vietnam remains a very attractive automobile market.

The output of the existing automobile manufacturers in Vietnam has not seen considerable improvement in the last 10 years as a result of tax policies which aim to limit the number of circulating cars due to bad infrastructure. However, in the last 10 years, the joint ventures have enjoyed protection from the government with import tax policies. That explains why the manufacturers cannot sell many cars, but they can still make profit and motor forward.

Experts these days are forecasting that the automobile market will witness a breakthrough in the time to come, after the 10-year period of producing in moderation. The basis for the forecast is Vietnam’s admission to the WTO, which immediately heated up the market in early 2007.

(Source: TBKTVN)

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