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Great potentials seen in Vietnam automotive industry

Mon, 08 Dec 2014. Last updated Tue, 13 Jan 2015 10:51

It is estimated that there are approximately 4% Vietnamese people owning a private car. According to a forecast of EuroCham, with impressive economic growth rate, Vietnam automotive industry has enormous potentials to develop.

In a WhiteBook issued by European Chamber of Commerce (Eurocham) on the issues of trade and investment in Vietnam, European business community offered many reviews, recommendations, and solutions to improve and develop Vietnam business environment in particular and Vietnam economy in general. According to the classification of EuroCham, Vietnam automotive market can be divided into 2 groups including imported automobiles and cars domestically assembled from imported components. Although car prices in Vietnam are high, automotive market in Vietnam significantly grew in a period of 2007 to 2012. In 2013, Vietnam automotive market reached the number of 106,500 cars involving imported cars, cars domestically assembled, and imported trucks. This number increased 20% in comparison to the previous year. In the first 7 months of 2014, the automotive market still strongly grew with the increase of 24% cars domestically assembled and 62% imported cars.

 

The first Ecosport released in Vienam

 

According to VAMA, the car market in Vietnam will still sharply develop until the end of 2015 because of the boost production of domestic automobile manufacturers. The reform of the banking system and the positive outlook of macroeconomics will continue facilitating for Vietnam car industry. The annual revenue growth in a period of 2014 - 2017 is estimated at 7%. Meanwhile, EuroCham also forecasted that the production of Vietnam domestic automobile assembly industry can only rise 3% per year because these enterprises have to face with stiff competition when ASEAN Economic Community (AEC) will be established in 2015. From 2014, applied tariffs on imported automobiles from ASEAN region has fell to 50%. It is expected that this number will continue decreasing to 0% in 2018. Thereby, imported cars from ASEAN can be increased correspondently.

 

BMW M4 Coupe

 

According to a forecast of EuroCham, with impressive economic growth rate, Vietnam automotive industry has enormous potentials to develop because there are only 4% Vietnamese citizens owning a private car. According to the evaluation of Vietnam Ministry of Finance, Vietnam automotive industry has met most of domestic demands with 80% of car and 60% of trucks. Recently, Prime Minister Nguyen Tan Dung approved a new master plan on the development of Vietnam automotive industry until 2025, the vision 2035, in which, the number of car will reach 225,500 in 2020 and increase to 466,400 in 2025 and 1,531,400 in 2035.

Along with that, Vietnam Government also recognized the need for planning and development of urban infrastructure to meet the needs of automobile use of the country’s citizens. On that basis, European Chamber of Commerce set out some proposals to develop the automotive industry in Vietnam in the future such as reducing the administrative burden of tax reimbursement, customs, the registry work, and so on. 

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