Vietnam’s auto industry and market is at an early stage of development. But accession to the WTO and a population of over 80m point to positive prospects for market growth that have already attracted a number of vehicle makers. Here are ten basic things to know about Vietnam, supplied courtesy of Globis GmbH.
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Vietnam’s population is over 80m and it’s a developing economy with per capita GDP of just $833 – distribution of income is relatively even.
Vietnam belongs to the WTO (joined 2007), ASEAN and AFTA. The country’s economy is growing at 7-8% pa.
The auto market has only recently opened up, so car ownership rates (3 cars per 1,000 people) are well behind China and India; however, the young parc offers considerable growth potential for vehicle sales and the aftermarket.
High import tariffs have meant high car prices; government policy on import duties – applying to both CBUs and KD kits/parts – remains an area of controversy and uncertainty though WTO membership should reduce risks for international participants.
In a market with high prices and low incomes, financing purchases through loans is becoming increasingly important.
There is no state champion or Vietnam ‘own brand’; several international OEMs have established JVs with state enterprises; brand loyalty is weak, with retail consumers influenced chiefly by product and price.
The auto supplier industry is thus far severly underdeveloped, keeping localisation low.
The Vietnamese car parc has grown from 100,000 cars in 2000 to 300,000 by the end of 2007; 30% of the car parc is accounted for by Toyota brand cars led by the Innova, Camry and Vios models.
CKD assembly of cars began in 1995 and JVs involving Toyota, Suzuki and Honda have led the market; Ford, Hyundai and Kia are also significant and Chevrolet is now growing extremely rapidly (Matiz and Captiva).
The car market is forecast to grow to over 120,000 units pa in 2010; MPVs and SUVs are big sellers.
Information supplied by Globis – a Germany-based consulting company with broad international coverage regarding strategy development, especially entry strategies into new markets.
Vietnamese Automotive Market: Passenger Cars, Suppliers and Aftermarket 2007/2008 – 2010 (download)
Globis market research available in just-auto’s research store
