Daihatsu is reportedly dissolving its joint venture in Vietnam.

According to a Japanese newspaper, Vietindo Daihatsu Automotive, a joint venture in which Daihatsu has a 26% stake, will be shut down, with the loss of 110 jobs. The automaker reportedly decided to leave Vietnam having sold just 530 cars there last year.

The emerging market has been depressed for the last few years but has now started to recover.

Automakers trying to establish a CKD kit assembly foothold in the country were repeatedly hit by huge rises in tariffs on imported components and a consumption tax on the completed vehicles and some threatened to pull out. The tax policy eventually backfired on the government, however, which saw overall  revenue fall, and tariff rates were adjusted at the beginning of this year, coinciding with World Trade Organisation (WTO) entry.

Vehicle sales in Vietnam more than doubled in the first two months of 2007, according to the Vietnam Automobile Manufacturers Association. The sharp rise in the early part of 2007, nevertheless, appears to be the continuation of a more sustained recovery in the domestic vehicle market that took root in the second half of 2006.

Daihatsu parent Toyota has been benefiting from the market improvement. It sold just under 15,000 units last year giving it a market share of over 36%. Toyota was an early CKD pioneer in Vietnam, beginning with Camry assembly.

Other assemblers are Isuzu and Ford, and Vinaxuki, which sells commercial vehicles sourced from China's Jinbei group. Honda began assembling the Civic passenger car in August last year and other manufacturers are preparing to follow, including Malaysia's JRD Automobile and China's Lifan Group.

With the country having joined the WTO at the beginning of 2007, confidence is running high. GDP growth is forecast by the Asia Development Bank (ADB) to accelerate to 8.3% this year, despite an expected slow-down in growth in major export markets this year.

All segments of the economy are expected to expand, including the automotive sector.

Some years ago, Daihatsu, as a separate brand, pulled out of certain Asia-Pacific markets including New Zealand. Parent Toyota's local units took over sales - or parts and service support for cars already on the road.

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