Automotive Report Vietnam November 2017

Automotive Report Vietnam November 2017

  • November 2017 •
  • Report ID: 3451950

  • Vietnam's automotive market is small relative to its population of around 95m, owing to years of international isolation and low incomes. However, vehicle sales rose sharply starting in 2013 and set consecutive annual records in 2014-16. Combined vehicle sales stood at nearly 310,000 units in 2016, according to the Vietnam Automobile Manufacturers' Association (VAMA). These data cover both VAMA members and other vehicle-makers.
  • Sales of cars, sports utility vehicles (SUVs) and multi-purpose vehicles (MPVs) rose by 31% in 2016, to 187,347 units. Sales of commercial vehicles (CVs) and buses grew by 20% to 122,080 units. The recovery was driven by solid export-led GDP growth, tariff cuts for small-car imports and lower interest rates.
  • This year has been less favourable, with total vehicle sales down by 9% year on year in January-October. Declines were seen across the board, with car sales down by 10.4% and those of CVs and buses down by 7.8%, based on VAMA data. The Economist Intelligence Unit expects a slightly recovery in CV sales in the last two months of 2017, but the decline in car sales is accelerating.
  • We forecast that Vietnam's GDP growth will average 6.2% a year in 2018-22, fuelling a revival in vehicle demand. Despite another dip in 2019, new car registrations will see a compound annual growth rate (CAGR) of 5.1% in 2018-22, while CV registrations will report a CAGR of 12.8%.
  • Vietnamese consumers will gradually shift away from two-wheeler cars. At the same time, tariffs on imported cars will be phased out under the Association of South-East Asian Nations (ASEAN) free-trade agreement. This may include the Trans-Pacific Partnership (TPP), revived in November 2017 at the ASEAN meeting in Vietnam by its 11 members (without the US).
  • Vietnam's automotive industry should benefit from low labour costs and government backing, along with the expected rise in domestic and export demand. This should attract some investment into production, despite the small market size. However, output may also suffer from competition with imports from bigger ASEAN members such as Thailand and Indonesia.


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Country=Vietnam Industry=MotorVehicle ParentIndustry=HeavyIndustry Date=201711 Topic=Demand Publisher=TheEconomistIntelligenceUnit Price=1000