Are many Japanese car manufacturers about to leave Vietnam?

The head of JETRO's representative office stated that Japanese automotive companies may close or scale back their car manufacturing and assembly operations in Vietnam.

The chief representative of the Japan External Trade Organization (JETRO) in Ho Chi Minh City has confirmed that many Japanese car manufacturers may withdraw from Vietnam. “Japanese companies currently investing in the automotive manufacturing industry may close or scale back their car assembly operations in Vietnam,” said Takimoto Koji, chief representative of JETRO in Ho Chi Minh City.

Currently, Japan has four car manufacturers in Vietnam: Honda, Toyota, Suzuki, and Mazda, but a representative from Jetro has not yet revealed which company will leave Vietnam...

Cheap cars imported from ASEAN and India pose a significant challenge to the domestic automotive industry.

Cars from India cost only around 84 million VND.

According to the latest data from the General Department of Customs, on average, in January 2017, each imported car into Vietnam cost only about 20,800 USD (excluding tax), while the average price of imported cars in January 2016 was 25,300 USD.

Of these, cars imported from India have the lowest prices, averaging only about $3,700 (equivalent to about 84 million VND/car, excluding tax); cars imported from Indonesia have an average price of only about 440 million VND...

Notably, the rate of import growth from ASEAN is very strong, especially for cars from Thailand and Indonesia. In particular, car imports from Indonesia surged dramatically, reaching 1,823 units, compared to only 1 unit in the same period last year.

For markets outside ASEAN, car imports from India recorded a sharp increase of 1,006 units.

Currently, many car showrooms are bustling with customers coming to view and inquire about purchasing car models priced under 500 million VND. Mr. Thanh Chung, residing in District 7, Ho Chi Minh City, explains his preference for imported cars, stating that even for the same model, cars manufactured in Thailand feel significantly smoother to drive than new cars produced in Vietnam.

"Perhaps the vehicle standards in Vietnam are lower, hence the lower prices, and many accessories are only available on imported vehicles," Chung said.

Mr. Nguyen Duc Toan (Hoang Mai, Hanoi) said he is looking for a car from Indonesia because he needs a safe vehicle for transportation. With a budget under 400 million VND, he plans to buy a car from ASEAN countries instead of some Korean models that are known for being cheap.

The trend is to import instead of produce.

Following the assessment by the JETRO representative, according to some experts and those with many years of experience in the automotive business, the departure of FDI-funded automotive manufacturing and assembly companies from Vietnam, if it happens, would be understandable.

Because Vietnam keeps offering preferential treatment without sufficient pressure, once they enjoy the benefits and importing becomes more efficient, they will abandon domestic production and switch to importing instead, rather than continuing this "charity" practice.

According to Mr. Le Nguyen Minh Tuan - Sales Director of Saigon Ford Pho Quang (Ho Chi Minh City), taxes have gradually decreased, and from January 1, 2017, small-engine vehicles with fewer than 9 seats imported from ASEAN countries have had their taxes reduced by 10% (to only 30%), so car manufacturers maintain two independent business segments: assembly and import for sale.

When Vietnam's automobile tax rate is reduced, causing car prices to drop by hundreds of millions of dong per vehicle, Mr. Tuan believes that manufacturers will shift to importing, gradually shrinking their domestic production.

The owner of a car showroom on Le Van Luong extended road (Hanoi) also stated that, through importing goods, he noticed that the significant tax reduction has led many car manufacturers to shift towards importing completely built vehicles instead of manufacturing and assembling them in Vietnam. These manufacturers only assemble models with small 1.5L engines, while the majority are imported from Thailand.

According to VOV