Domestic car market: Giving way or self-inflicted defeat?

From a policy perspective, the desire to cling to hope for the domestic automotive industry is clear. However, the delay in implementing groundbreaking policies is inadvertently creating a huge gap for imported cars to surge ahead.

In less than four years, a massive influx of cars originating from ASEAN countries will be unavoidable. With zero (0%) tariffs, the price advantage will provide superior, even absolute, competitiveness for imported cars from this bloc.

Recently, this long-anticipated pressure has become increasingly intense and evident. A few statistics alone are enough to demonstrate this.

According to statistics from the General Department of Customs (Ministry of Finance), in the first three months of this year, the volume of completely assembled cars imported from ASEAN, more precisely Indonesia and Thailand, has increased sharply.

Imported cars are surging ahead.

Specifically, 2,117 complete cars were imported from Indonesia and Thailand in the first quarter of 2014, reaching a value of over $32.3 million. This is in comparison to the same period last year, when only 1,686 cars were imported with a value of nearly $28 million.

Notably, the acceleration of car imports from Thailand is increasing at a dizzying pace. A small, rather worrying comparison is that the total value of car imports from ASEAN in the first three months of last year was only equal to the value from neighboring Thailand alone in the first three months of this year (1,746 units and $28.8 million).

Furthermore, for the past three consecutive months, car imports from Thailand have been increasing sharply in both quantity and value. Specifically, while the import value in the first month of the year was only 338 units and $4.7 million, it doubled to 678 units and $11.2 million in February, and reached 730 units and approximately $12.9 million in March.

Most recently, the General Statistics Office (Ministry of Planning and Investment) also released a startling figure. It is estimated that car imports in April 2014 reached 5,000 units and $130 million, bringing the total for the first four months of the year to 15,000 units and $329 million, an increase of 53.4% ​​in volume and 76.6% in value compared to the same period last year.

The timeframe of less than four years leading up to 2018 could even be considered meaningless for efforts to establish a truly independent automotive industry.

Of course, the continuous sharp increase in car imports is partly due to the overall recovery of the market. However, the main concern lies in the comparison of growth rates between imported cars and domestically assembled cars.

According to the sales report of the Vietnam Automobile Manufacturers Association (VAMA), total sales of domestically assembled vehicles (CKD) in the first quarter of 2014 reached 21,488 units, a 24% increase compared to the same period last year. Meanwhile, the number of imported vehicles (CBU) reached 8,539 units, a staggering 98% increase. Clearly, this overwhelming disparity raises concerns for domestically produced and assembled automobiles.

Despite the immense pressure, as mentioned above, the policies expected to create a breakthrough for the domestic automotive industry have yet to be implemented. For example, the new automotive industry strategy and planning for the period up to 2020 and with a vision to 2030, spearheaded by the Ministry of Industry and Trade, remains incomplete.

According to experts, the period of less than four years until 2018 can even be considered meaningless for efforts to establish a truly domestic automobile manufacturing industry, let alone one capable of competing on a level playing field. In a way, we are essentially losing out to completely imported vehicles. Furthermore, the delay in implementing policies to promote (or create breakthroughs) for the automotive industry is tantamount to deliberately ceding ground.

According to chinhphu.vn