VietNamNet Bridge – The stable economic growth of 7 percent every year and the average income per capita at 3810 dollars by 2015, will all help increase the level of automobile “coverage” in Vietnam to 26 cars per 1000 people by 2015, from the current level of 18.7 cars.

The report made under the framework of the plan to program the development of the automobile industry in Vietnam by 2020 by the Institute for Industrial Strategies and Policies, which has been submitted to the Ministry of Industry and Trade, shows that cars have still been highly appreciated by consumers in terms of convenience, independence and the expenses.

In 2010, with the total population of 86.7 million people and the modest income per capita of 1150 dollars, Vietnam was still considered by the World Bank as the country with high consumption level among ASEAN countries.

Another survey conducted by TNS Vietcycle in 2009 also showed that up to 45 percent of households have the income of between 4.5 and 20 million dong a month. The higher living standard has prompted a lot of people to spend money on cars, especially young people.

If noting that the current average income per capita calculating in accordance with the purchasing power at 2785 dollars, the proportion of 18.7 cars per 1000 people in Vietnam is now much lower than that in other countries with the same level of income. The high car prices, the lack of parking lots and the big expenses for using cars are all the big reasons that have hindered the increase of the number of cars used by people.

The experts who conducted the research work have predicted that by 2015, the proportion of people who have cars by 2015 would be 26 cars per 1000 people, while the figure would rise to 40 cars per 1000 people by 2020 and 60 cars by 2025.

Experts, though believing that there are still a lot of opportunities to increase the car consumption in Vietnam, have warned that the high luxury tax would be the big obstacle to the development of the private car market in Vietnam, even though Vietnam will fulfill the import tariff cut process within AFTA (ASEAN Free Trade Agreement) by 2018.

The obstacle would also be bigger with the fees and taxes, including the ownership registration tax, number plate fees, tolls and parking fees, which have been increasing as the result of the policy on restricting private vehicles, especially cars.

Frost & Sullivan has released a report showing that the car demand in the ASEAN car market would reach 3.962 million cars by 2018, while the demand in Vietnam would be about 10-12 percent, or 400,000-500,000 cars. Of these, the demand for sedans would be some 28 percent, while multi-purpose and 4WD cars would be 25 percent, and trucks and passengers cars would be 40 percent.

Researchers have pointed out that the automobile market would witness a stiff competition between domestically made products and imports.

“Together with the tariff cut under the framework of CEPT/AFTA, more imports from ASEAN countries will arrive in Vietnam, thus putting a hard pressure on domestically made products, not only in terms of the prices, but also in technical standards and environmental standards,” Nguyen Van Liem, Deputy Director of the Institute for Industrial Strategies and Policies, said.

The existing automobile manufacturers in Vietnam now can churn out 431,000 cars a year, but the highest ever output is 200,000 only. Therefore, the researchers have proposed to stop licensing more automobile projects until 2015, except the projects on making strategic car products.

However, in fact, analysts believe that not many big automobile manufacturers in the world intend to make investment in Vietnam, because the policies are unstable. Local newspapers recently have quoted big automobile manufacturers as saying that they are heading for other regional countries instead of Vietnam, because the policies applied by the countries are stable and predictable.

Source: TBKTVN