Imported cars dominate the exhibition of 'assemblers'

At the exhibition of the Vietnam Automobile Manufacturers Association (VAMA), the main car models are all imported.

Vietnam Motor Show 2016, taking place from October 6-9, is an exhibition of firsts. It is the first time it returns to Hanoi after a long time in Ho Chi Minh City, the first time there is differentiation within VAMA so that some brands can participate in other playgrounds, and also the first time that all the brands' main products are imported cars.

Ford's booth focuses on the American-imported Explorer.

Ford with Explorer, the best-selling product in the North American market last year and expected to make a breakthrough in Vietnam with a price of 2.18 billion. In addition, Isuzu brings mu-X, a mid-size SUV competing with Fortuner and Ford Everest. Isuzu also brings the new version of the D-Max pickup. Both products are imported from Thailand.

Toyota, the brand with the largest market share in Vietnam, despite its modest showroom space, is still able to attract customers with the new generation Fortuner imported from Thailand, a model that was launched in this country in July 2015. Although Fortuner is only brought back for display, without a time or price to be released to the market, its central position at the booth is enough to show that the Japanese car company has high expectations for the SUV with the highest sales in the segment.

Chevrolet launched the Trax imported from Korea, a rival to the Ford EcoSport, along with a new version of the Colorado. Two Truong Hai brands, Mazda, showed off the CX-3 imported from Thailand and Kia with the Quoris imported from Korea. Another company that imports a lot of cars from Thailand, Mitsubishi, continued that tradition by introducing the new Pajero.

Thailand has become a favorite import destination for brands as another highlight of the exhibition is the Honda Civic, a model expected to correct mistakes and bring the C-size sedan back to a high position in the Vietnamese market since early 2017, also imported from Thailand.

Honda Civic will be imported from Thailand and no longer assembled in Vietnam.

The small space of the exhibition paints a picture of a game of imported cars. The limited space prevents the companies from drawing more models that focus on technology demonstration or design trends, so the names that appear all implicitly show that these are cars that will sooner or later be sold in Vietnam.

This is not the first time Vietnam Motor Show has taken place in this direction. Since the 2014 exhibition in Saigon, this trend has begun to take shape, showing a market where imported cars will prevail in the future.

Among the trump cards, many names whose old versions are sold in Vietnam are assembled, such as Toyota Fortuner or Honda Civic. Explaining the reason for the imported cars, some company representatives said that because they have not been officially distributed in Vietnam, the displayed products are imported cars. When sold, whether they are imported or assembled depends on the market's reaction.

In return, an industry expert analyzed that the wave of shifting from assembled cars to imported cars is gradually emerging. With models sold for the first time in Vietnam such as Explorer, mu-X, Trax, the company chose to import to maximize economic benefits.

"It is impossible to produce domestically while not being able to accurately measure market reaction," he said.

Fortuner display version is also imported from Thailand.

In contrast to the models that were once distributed in Vietnam as assembled vehicles, the new version switching to import is also a reasonable way to calculate business efficiency. The reason for the sign of shifting from assembly to import was formed when free trade agreements introduced a roadmap for tax reduction, especially AFTA with import tax on vehicles in the ASEAN bloc by 2018 at 0%.

Thailand has an advantage in having similar products to Vietnam, and the government's push to boost exports to counter the weakening domestic market is another advantage. Furthermore, producing a CKD vehicle in Vietnam may incur a general tax rate of 20-25% for separate components, but importing a complete vehicle from ASEAN will have a tax rate of only 0%.

The CEO of a fast-growing car company in Vietnam once said that the decision to import or continue assembling is ultimately just an economic problem; the company will choose whichever option brings the highest profit.

A country’s auto show is a picture that predicts the future market structure of that country. With advantages in policies and origins, imported cars, especially from Thailand, will threaten the prosperity of assembled cars in the coming years, if not for government intervention policies.

According to VNE