Indonesian cars worth 300 million, Thai cars worth 400 million are pouring into Vietnam

The average price of imported cars from Indonesia to Vietnam's ports is only 289 million VND/car, cheaper than Thailand's 407 million VND/car. That is the price in 2016, in 2017 the price will decrease further when the tax is reduced, causing more cheap cars to flow into Vietnam.

Currently, many enterprises are shifting to importing cars from Indonesia to Vietnam for distribution instead of manufacturing and assembling domestically. From the bottom of the table, Indonesia has made a spectacular breakthrough, aiming for the leading position in exporting cars to Vietnam.

Dizzying increase

According to the General Department of Customs, in January 2017, the number of imported cars from Indonesia increased dramatically, reaching 1,823 units, worth 35 million USD, an increase of 1,823 times compared to the same period last year.

Meanwhile, in January 2016, there was only 1 car imported from Indonesia. If we count the whole year of 2016, the number of cars imported from Indonesia was only over 2,000. Thus, in just the first month of 2017, the import turnover of cars from Indonesia was almost equal to the whole year of 2016.

The reason for the sudden increase in car imports from Indonesia is that Toyota Vietnam has switched to importing the Fortuner 7-seat SUV produced here. This model accounted for more than 2/3 of the number of cars imported from Indonesia in January 2017. However, the 2017 Fortuner is not a cheap car. In Indonesia, the 2.7L gasoline engine version, 2WD, costs VND883 million, when imported to Vietnam, this car has a selling price of VND1.308 billion.

Thus, it can be said that, up to this point, cheap cars from Indonesia have not flooded into Vietnam. However, in the coming time, cars from this country will enter Vietnam more and more, due to tax reduction, including many cheap car models.

Figures from the General Department of Customs show that in 2016, the average price of imported cars from Indonesia arriving at Vietnam's ports was only 289 million VND/car, 407 million VND/car cheaper than Thailand.

Indonesia is seen as the leading low-cost car manufacturing center in Southeast Asia.

Since 2007, Indonesia has planned to develop low-cost and fuel-efficient strategic vehicles. The island nation’s government has stipulated that cars eligible for incentives must have engines with cylinder capacity under 1.2L, cost under $10,000 and consume less than 5 liters of fuel per 100 km. The localization rate is over 60%.

Thanks to tax policies and incentives, businesses have been able to set very low prices for small, environmentally friendly cars.

Since 2013, most car manufacturers have introduced to Indonesian consumers a series of small, fuel-efficient and cheap car models, meeting most of the needs of ordinary consumers. The common domestic price is only 10,000-15,000 USD, equivalent to about 220-300 million VND.

Cheap cars flock to Vietnam

As of 2016, Indonesia's automobile production reached more than 1 million vehicles, accounting for 62% of total capacity, with exports accounting for only about 23%. Compared to Thailand, which has a production of over 2 million vehicles and exports accounting for 55%, it is still far behind.

However, according to experts, Indonesia’s domestic automobile market will improve in the coming time thanks to its large population and improved living standards. On this basis, automobile manufacturers will be able to develop their markets abroad as they grow stronger.

According to the Indonesian Automobile Manufacturers Association, by 2020, Indonesia's car production is expected to reach over 2 million units, of which about 600,000 units will be exported.

Experts also say that Indonesia has the potential to become a major exporter of cars to Vietnam. In fact, just one Fortuner model is enough to make a dramatic change in the export turnover of cars from Indonesia to Vietnam this year.

Since its launch in the Vietnamese market in early 2009, Fortuner has always had sales of over 10,000 vehicles per year. In January 2017, the Fortuner model sold over 1,200 vehicles. At this rate, it is predicted that the number of imported Fortuners could reach 12,000-15,000 vehicles in 2017.

But it's not just Fortuner. The director of a Japanese car company in Vietnam said that next year, it will import 7-seat cars from Indonesia for distribution. The 7-seat car segment with small engines under 2.0L will have many advantages, this director commented.

The special consumption tax for cars with cylinder capacity of 1.5 L or less will be reduced to 35% in 2018, so small cars will benefit more. In addition, by 2018, the import tax on cars from ASEAN will be 0%.

Thus, if importing small cars from ASEAN, the company will have a double advantage, reducing both special consumption tax and import tax. Vietnamese customers are in the process of switching from sedans to high-chassis vehicles such as SUVs, Crossovers, or MPVs, which can carry many people and operate on many types of terrain.

Enterprises said that 2017 was still just a market exploration phase. But in 2018, there will be many changes. A series of SUV, Crossover, MPV 5-7 seats, with cylinder capacity under 2.0L of famous brands have the conditions to penetrate the Vietnamese market. Indonesia is no different from a Marathon athlete, in the final stretch, it has surpassed impressively, leaving many competitors far behind, to compete for the leading position in automobile export to Vietnam.

According to VNN