The auto industry is not just about cars.

In terms of products, the automobile segment seems to be naturally considered the face of the Vietnamese automobile industry.

Not just cars with less than 10 seats

For a long time, whenever mentioning the automobile industry, many people, even experts, almost only imagine the production of passenger cars with less than 10 seats (briefly called "cars"). When referring to the formation and development process of the industry, the milestone mentioned is also the time when automobile joint ventures were licensed and put into operation.

It is trucks and buses that have helped Truong Hai and Vinaxuki grow strongly, creating their own resources to nurture their dream of producing cars. (Photo: VnEconomy)

It is a more or less emotional view, significantly influenced by the people's desire to own a high-end vehicle, a car, and the policy makers' desire to have a super industry, car manufacturing.

Meanwhile, most of us are forgetting (or accidentally forgetting) that the automobile industry is not only about producing cars but also producing many types of vehicles that are extremely important to each economy, more specifically to the production and business activities of the business community, economic households and individuals. These are trucks, specialized vehicles, passenger cars (from 10 seats or more).

It is from this perspective that the Vietnamese auto industry was once considered a burden after two decades of enjoying many incentives and care from protection policies, stimulating production and consumption of domestically assembled cars.

And if we only look at the automobile manufacturing sector, it is true that the Vietnamese automobile industry is failing, really failing, especially when applied to the goals set out in the strategy and planning for automobile industry development until 2010 and vision to 2020.

It is now 2014, which means that in less than 4 years, the import tax rate on completely built-up cars from countries in the Southeast Asian region will be reduced to 0%.

The problem is that, up to now, Vietnam is still struggling with a simple assembly process, with almost no localization rate, except for a few individual products such as the Toyota Innova reaching around 40%.

Meanwhile, ASEAN countries such as Thailand and Indonesia are growing extremely strongly to become major automobile manufacturing centers in the world, from which they export to other markets, of which Vietnam is a potential market with a population approaching the 100 million mark and a very low rate of car ownership.

The automobile joint ventures themselves also admit the fact that, with the remaining 4 years, Vietnam cannot develop the automobile industry with the main product being cars in the true sense. There was even a warning that "by 2018, at most, only 3 foreign automobile companies will maintain factories in Vietnam".

That many companies will remain, if the auto industry does not immediately make groundbreaking changes.

"Saving" commercial vehicles

It is clear that automobile production in Vietnam is in a difficult position. This sector is being squeezed between the roadmap for tariff reduction according to integration commitments, on one hand, and the policy of controlling personal car consumption due to the lack of and weak transportation infrastructure, on the other hand. Not to mention, the foreign preference mentality is still very popular among current automobile consumers.

Meanwhile, trucks and buses have advantages that cannot be ignored.

First of all, commercial vehicles are not under heavy pressure from imported vehicles like cars. For example, in Southeast Asia. The roadmap to reduce import tax on completely built-up vehicles is very fast and by 2018 it will be 0%, which is making manufacturers of vehicles with less than 10 seats in Vietnam very worried.

Because, with the right stimulus policies, the auto industry in Thailand and Indonesia is growing very strongly. It is worth noting that the large auto factories in these two countries mainly produce and assemble vehicles with less than 10 seats, not trucks or buses. Therefore, the worry about AFTA can be eliminated.

In fact, policies related to the automobile industry have always tried to create the best mechanism for domestic manufacturers. Specifically, the orientation of applying high tax rates to domestically produced and assembled vehicles has always been maintained.

According to the import tax schedule issued by the Ministry of Finance with Circular 193 dated November 15, 2012, the current import tax on passenger vehicles with 10 seats or more is still applied at 70%, equivalent to the tax rate applied to vehicles with less than 10 seats. Trucks are still subject to a complete import tax rate of 10-62% depending on the load capacity, with the principle that the lower the load capacity, the higher the tax rate.

When free trade agreements were signed between ASEAN and three countries (and also three countries with developed automobile industries), namely China, South Korea and Japan, the product groups of buses and common trucks were not subject to preferential treatment. Accordingly, the import tax rate for these types of vehicles was still applied as stipulated in Circular 193.

It is worth noting that these product groups themselves are not the main targets of attack by foreign automakers and importers. Moreover, if viewed objectively, domestic auto companies have been producing and selling quite well vehicles in this group.

Among the 56 automobile manufacturers in Vietnam today, truck and bus brands that are dominating the market share are Truong Hai, Vinaxuki, Samco, Vinamotor and VEAM. In fact, from a certain perspective, it is the trucks and buses that have helped Truong Hai and Vinaxuki grow strongly, creating their own resources to nurture their dream of manufacturing cars.

Previously, some experts commented that instead of dreaming of producing Vietnamese brand cars, businesses should focus on researching and producing trucks and buses.

Instead of struggling to keep the localization rate of domestically assembled vehicles with less than 10 seats still below 5% while the target by 2010 is already 40% according to the plan, why not focus on what has been done and is doing well, which is producing trucks and buses with a localization rate that has mostly exceeded 50%?

The good news is that in the strategy and planning for the development of the automobile industry in the new period until 2020 with a vision to 2030, the Ministry of Industry and Trade has drafted a fundamental change: focusing on production to meet domestic demand for medium and small trucks, passenger cars, and some specialized vehicles (concrete mixers, tankers, etc.).

Along with that is the ambition to produce components and spare parts for global supply, becoming a satellite of major automobile manufacturers in the world.

According to thoibaokinhte