Viet Nam News
HÀ NỘI — The domestic automobile market has warmed up recently, and consumption is seen moving toward vehicles with 1,500cc engines, or smaller, and pick-up trucks.
Insiders said this trend was obvious during the two largest auto shows held in Hà Nội and HCM City in October. Each exhibition showcased some 150 models, including SUVs, sedans, luxury cars, passenger cars, commercial vehicles, pick-ups and special-purpose vehicles. However, the overwhelming majority at both events were focused on small and medium segments which had prices within reach of customers.
In response, automakers have recently rolled out many small, fuel-efficient sedans at reasonable prices. Further, customers indicated they wanted to purchase small vehicles that are more convenient for driving in crowded cities in Viet Nam, and in response to the fluctuation in fuel prices.
According to statistics from the Vietnam Automobiles Manufacturers’ Association, the share of vehicles with 1,500cc engines, and smaller, has grown to half of the market, much higher than the previous period, which was only one-fourth of purchases.
In addition, the Government’s policies on tax adjustments have encouraged the purchase of smaller vehicles. As of early 2016, import taxes on vehicles of nine seats and below, manufactured in ASEAN member countries, has been reduced to 40 per cent. Meanwhile, the Special Consumption Tax tariff on autos saw many changes with the new regulations, which came into effect on July 1. Imported vehicles with nine seats or less - and engine displacement of 1,500cc or less - will enjoy a reduction from the current tax rate of 45 per cent to 40 per cent. The tax rate will be further reduced to 35 per cent on January 1, 2018.
Participating in the changes, the Việt Nam automobile industry development strategy has also encouraged production and consumption of small sedans, which are fuel-efficient and more affordable.
Meanwhile, local automakers continuously launched promotional campaigns and reduced prices to boost demand. Additionally, importers have embraced changing trends in demand.
At the exhibition last month, Audi Vietnam launched two new models, the Audi Q2 and Audi Q3 Sportback, which both have 1,400cc engines. Meanwhile, Euro Auto Vietnam introduced a number of models with 1,500cc engines, such as the Mini Cooper and BMW 2 Series Gran Tourer.
Also, Suzuki Vietnam showcased their all-new Ciaz sedan with a 1,400cc engine, in an effort to meet the increasing demand of customers during the year-end shopping season.
Trần Tấn Trung, General Director of Liên Á International Joint Stock Company, which is the official supplier of Audi in Việt Nam, said besides luxury cars with high engine displacement, his firm had been distributing small sedans with integrated technologies and reasonable prices to compete with other firms.
Those sedans with low engine displacement are currently on Audi’s priority products list in the Vietnamese market, and will remain so in the future, said Trung.
The rise of pick-ups
The sale of pick-up trucks has been as busy as the small sedan market, as the vehicle has been further equipped with convenient features, similar to passenger cars, but having different purposes, such as traveling, carrying goods and being capable of operating in various terrains, from cities to rural and mountain areas.
In comparison with multi-purposed SUVs, which have the same engine displacement, the price of SUV units is billion of đồng, much higher than pick-up trucks, which cost VNĐ600-700 million (US$26,595-$31,028). Furthermore, pick-ups have a low registration fee of two per cent of value, while others are as high as 10-12 per cent.
The market has seen many brand names from the US and Japan, including Ford Ranger, Mazda BT50, Mitsubishi Triton, Toyota Hilux, Nissan Navara, Isuzu D-max and Chevrolet Colorado, in addition to the UAZ brand name from Russia with the Patriot model, costing more than VNĐ500 million, the least expensive auto in the same segment.
The sale of pick-up trucks reached 16,741 units in 2015, making a year-on-year increase of 100 per cent and taking the third leading position in the market, following the sedan and SUV.
However, not every model has seen strong growth in the Vietnamese market. In the first 10 months of this year, the Ford Ranger continued its leading position with 11,402 units sold, up 91 per cent compared with the same period last year. It is now referred to as “the King of pick-ups” in the market.
Phạm Văn Dũng, General Director of Ford Vietnam, said the Ranger had kept its position in the Vietnamese market because of its intelligent functions. On average, there is one Ranger for every two pick-ups sold.
Meanwhile, other models, such as the Mazda BT50 and Mitsubishi Triton, saw sales of 273 and 142 units in October, respectively. The Toyota Hilux, Chevrolet Colorado, Isuzu D-max, and Mekong Pronto Premio sold from 20 to 80 units each.
Although almost all auto firms have been present in Việt Nam, most pick-up models have been imported from Thailand, which is seen as the world largest pick-up truck manufacturing base. Pick-ups are required to pay only 5 per cent of import tax, compared to 40 per cent for others.
It is predicted that the demand for pick-ups will accelerate when its price falls under the ASEAN trade agreement, in which the import tax will be reduced to 30 per cent by 2017 and zero per cent by 2018. With such advantages, the pick-up market will be busy in the future and may occupy a large market share.
Furthermore, the pick-ups have been allowed to travel in the same category as small sedans in cities beginning on November 1 this year. According to Circular 06/2016/TT-BGTVT issued by the transport ministry, pick-ups are no longer banned from traveling on roads during certain hours.
However, after the circular was issued, Hà Nội taxmen proposed to increase registration fees for pick-ups from 2 per cent to 12 per cent, similarly to those of sedans. — VNS