Auto sector in dire straits

Toyota Motor Vietnam’s general director Yoshihisa Maruta last week told VIR that Vietnam needed to convey support for the manufacturers if the country wanted to develop the car industry to succeed.

“The most important timing is 2018, when the auto import tax among ASEAN countries comes to 0 per cent. In order to develop the car industry, Vietnam needs to sustain the manufacturers,” Maruta said.  

With the domestic market mired in the economic slump and sales slow, assemblers worry about their investments. Last year, Maruta’s  predecessor at  of Toyota Motor Vietnam forecasted only three foreign invested manufacturers could stand in Vietnam till 2018.

Maruta said the government’s supports in terms of tax, land rent, human resource training and technology transfer would help attract foreign investment.

Meanwhile, GM Vietnam and Honda Vietnam remain silent on their investment in the near future.
Business Monitor International (BMI), an independent provider of analysis,  last week also warned that a lot needs to be done in terms of policy changes to make Vietnam an attractive market for autos-related investment in the Asia-Pacific region.

“Although the government has tried to increase domestic production in the industry, in particular by raising import tariffs on vehicles, there has been little in the way of rewards for companies which have chosen to invest,” stated BMI.

The agency also reported that in the ‘rewards’ section of BMI’s industry risk/reward ratings for the autos sector in Asia, Vietnam scored far below its neighbours in terms of the industry rewards on offer.

As such, it had a pessimistic outlook for the production segment. BMI cited a March 2012 report by Vietnam’s Chamber of Commerce and Industry highlighting structural weaknesses in the country’s auto sector and the ongoing threats to the demand side of the industry.

Currently, auto assemblers said the demand for automobiles was still very high for long term.
Vietnam has the population of about 90 million people with increasing income, while the number of cars per capita still remains at low rate of 18 units per 1,000 people.