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Strategic Analysis of the Automotive Market in Vietnam

  • September 2013
  • -
  • Frost & Sullivan
  • -
  • 72 pages

Positive Government Policies and Increasing Disposable Incomes to Drive Market Growth

Rising levels of disposable income and new government policies are set to drive automotive market in Vietnam. This market insight research service analyzes trends in Vietnam’s emerging automotive market. It provides market drivers and restraints, a market overview, an engine capacity analyst, trends in vehicle segments, a market performance analysis, and study conclusions. Segment covered include passenger and commercial vehicles, with a special focus on passenger cars, multipurpose vehicles, sports utility vehicles, and pickups. The base year is 2012, and the forecast period is 2013 to 2019.

Executive Summary—Vietnamese Automotive Market

Market Size
The Vietnamese automotive market was badly hit in 2012 by the global economic downturn coupled with numerous increases in taxes and duties. Total sales regressed to levels seen in 2007, when Vietnam first joined the World Trade Organization.

Regulations
Constantly changing government policies and regulations have negatively impacted consumer sentiment and investor confidence in the market.

Manufacturing
There are manufacturers and assemblers with a combined production capacity of vehicles per annum. Lack of economies of scale and the short-term repercussions of unstable policies have resulted in high production costs.

Key Participants
Toyota and Truong Hai are the dominant participants, each taking up nearly one-third of the market share.

Executive Summary—Vietnamese Automotive Market, Unit Shipments

• With a decline of X%, 2012 was one of the toughest years for the Vietnamese automotive market, which fell back to 2007 sales of X.
• The primary reason for this was the economic downturn and increases in car registration fees (to a maximum of X%) and plate number fees (by X times from VND* Xmillion to X million).
• Besides this, the government’s plans to introduce other types of taxes and charges, such as a personal vehicle ownership restriction fee, road maintenance tax, and congestion charge, have also affected market growth.

Executive Summary—Vietnamese Automotive Market, Key Takeaways

1. With a drop ofX% in total sales to Xunits, 2012 was a difficult year over 2011. This was mainly due to the effects of the global economic crisis on the local economy and negative consumer sentiment as a result of various hikes in automotive fees and charges.
2. The market is expected to see growth in the coming years and reachXunits by 2019, growing at a compound annual growth rate (CAGR) ofX%. This growth will be attributed mainly to increasing disposable incomes, government policies to support the automotive industry, and tariff reductions according to AFTA and WTO* commitments.
3. Small and fuel-efficient cars are expected to drive growth in the passenger vehicle segment, while pickup models will continue increasing in popularity.
4. Toyota is expected to continue controlling the market, while Truong Hai will increase its market share considerably due to its planned expansion of existing brands and launches of new ones. More luxury brands are also expected to be present in the market to appeal to the growing elite class.
5. The revised version of the Development Plan for the Automotive Industry by 2020 with a vision towards 2030 is likely to be announced in the second half of 2013 and may only have an impact starting in 2014. The main goals in the Development Plan revisions include identification and development of strategic vehicles (most likely passenger vehicles less thanX cc), meeting production and export targets, and strengthening supporting industries.

Table Of Contents

Strategic Analysis of the Automotive Market in Vietnam
Table of Contents

Executive Summary 4
Market Overview 9
Drivers and Restraints 20
2012 Automotive Market Recap 25
Engine Capacity Analysis 34
Vehicle Segment Trends 38
Market Performance Analysis and Future Outlook 48
Conclusions and Future Outlook 62
Appendix 66
The Frost and Sullivan Story 68

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