In 2018, Vietnamese people have the opportunity to buy luxury cars.

As 2017 comes to an end, companies have not yet had time to breathe a sigh of relief due to the decline in sales when the pressure from policy changes appears again. Industry experts predict growth in 2018, but the specific numbers have many scenarios, depending on government policies.

A member of VAMA revealed that the association has made a prediction, the brightest figure is an increase of 40% compared to last year, if imported cars can return home as usual soon. On the contrary, if imported cars cannot return home early, have to wait until mid-year, or even cannot return home at all, then the market will increase by about 5%. To choose the average level, this person thinks about 10-15% is reasonable.

The impact of the policy on the market in 2017 made VAMA much more cautious when planning for 2018. If the company's battle in 2017 was focused on psychological warfare with customers, then in 2018 things are more complicated, in every segment.

Popular cars are a life-or-death battle between import and assembly, as Decree 116 has yet to change. Luxury cars are booming as BMW is owned by Truong Hai and priced hundreds of millions lower than in the Euro Auto era. A segment that is expected to grow next year but faces many challenges is the luxury segment, where there are currently only Volkswagen and Peugeot.

Popular cars: the advantage belongs to assembly

A few years before 2018, assemblers were worried that they would not be able to compete with imported cars when import tax from ASEAN was 0%. But at the end of 2017, government policy interventions turned the tables. The auto industry was directed to assemble, so assemblers were given many incentives, while Decree 116 made it difficult for imported cars.

At this point, most joint venture companies importing popular cars from ASEAN are waiting, not knowing when they will be able to import. The companies are busy preparing for the type quality certificate, but even if it is early, it will still take 4-5 months to import cars. Honda, Toyota, Ford all have to wait because they are still moving towards mainly importing. CR-V, Fortuner or Ranger are all out of stock, customers cannot buy cars or are forced to switch to domestic assembly.

In contrast to Truong Hai, Thanh Cong is taking advantage of the incentives to expand its factories and develop as many as possible as quickly as possible. Without import as a counterweight, assembled cars can set their own market prices, lead the game and even dominate customers.

Thanh Cong and Truong Hai have begun to benefit from Decree 125, which exempts import tax on components. But that seems not enough for the big guys. Mr. Le Ngoc Duc, General Director of Hyundai Thanh Cong, believes that there must be more incentives for assembled vehicles, such as exempting special consumption tax for the domestic value, because if incentives only stop at Decree 125, it is "half-hearted incentives". This CEO is also confident that these proposals will soon become reality.

The confidence of the two assembly companies is synonymous with the concerns of joint ventures with imported cars. If they continue to keep some models as imported models, they will have to accept competing on factors other than price, because imported cars will have difficulty reducing prices like assembled cars.

Luxury cars: opportunity to buy luxury cars for Vietnamese customers

Mercedes Vietnam said it was both worried and happy when Truong Hai won the right to distribute BMW cars. The obvious worry is market share. As soon as it was launched, Truong Hai's BMW was cheaper by several tens to nearly 600 million compared to similar models when Euro Auto was distributing them. This price was cheaper than Mercedes, directly threatening Mercedes's throne in the luxury car market in Vietnam.

Truong Hai itself does not have high expectations for initial sales despite the low price, because this is the time for customers to listen to the reactions of others. If customer service is good, then the company can start selling cars.

Meanwhile, Mercedes accepts a more intense market share sharing than in the Euro Auto era. But the company also hopes that BMW's low price will expand the luxury car market margin, and more customers from the popular segment will move up to the high-end segment. "When they intend to buy a luxury car, the opportunity is shared equally among all," a representative of Mercedes Vietnam shared. The lost market share can be compensated by increased sales.

The luxury car market will be more exciting, especially when Truong Hai plans to put 15 showrooms into operation in 2018 or at the latest in early 2019, equal to the network of Mercedes in more than 20 years in Vietnam. Small competitors also have opportunities when the market expands, but they need to create better differentiation if they do not want to be overwhelmed by the two big brands.

Lexus may have to import cars from Europe if Japan cannot provide type approval. Audi has its own customer base, which is fashionable and does not often overlap with BMW. Volvo, Maserati, Porsche are even more unique. "The best way to compete is to do well yourself," said a company representative.

Approaching luxury: what opportunities are there for "limbo" names?

Near luxury is the segment for European imported cars, but not as luxury as Mercedes or BMW, that is Volkswagen and Peugeot. Truong Hai has brought Peugeot to Vietnam for many years but has not had positive results. The number of cars sold each year is only a few hundred.

Meanwhile, Volkswagen has also been floating and obscure for many years, with no clear value, while its European import origin makes its price much higher than Japanese cars.

In 2018, both companies showed changes to remake the market. Peugeot launched two models 3008 and 5008 (extended version of 3008). The new modern design, pleasing to customers, more technology helped the two new cars initially bring positive sales trends. Two months of orders were more than the whole year before. If sales are good, Peugeot can support itself and not be a "fun" brand in Truong Hai's product structure.

Volkswagen is broader in both its portfolio and its business plan. In 2017, the company sold more than 700 cars and hopes to increase that by about 40% to over 1,000 cars in 2018. To achieve its goal, the company opened four dealerships at the beginning of the year and will open more in the near future.

The expansion efforts of Volkswagen or Peugeot must go hand in hand with product differentiation to compete with Japanese cars. Like Volkswagen, the car is made in Germany, the price is higher than Japanese cars, lower than luxury cars, and the performance and driving feeling are also one level above Japanese cars, even equivalent to luxury cars in the low segment.

However, no matter how well a car runs, if it doesn't have a USB slot (while the CD player can read up to 6 discs), it is unlikely to win over Vietnamese customers, who are fond of convenience.

The Vietnamese market will grow by 5%, or up to 40% as envisioned by VAMA, depending largely on the stability of policies as well as the financial capacity to set low prices in a highly price-sensitive war.