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back to index backASIAtalk October,  2005

Vietnam: MPVs rule the automobile market

Over 25,000 vehicles were sold by 11 foreign-invested automobile companies in the first nine months of this year, up 11 per cent compared to the same period last year, according to the Viet Nam Automobiles Manufacturer Association (VAMA).

The association, representing 11 leading enterprises in the automobile industry, attributed the increase to the robust sales of vehicles in the 6-15 seater segment, referred to as multi-purpose vehicles (MPV).

While three other segments (the 0-5 seater, 16-24 seater and buses & trucks) experienced no major change in volume of sales, the MPV segment saw a 36 per cent year-on-year increase with recorded sales of 9,176 units in the first three quarters.

The "all-in-one" Toyota Zace and Mitsubishi Jolie remained the major players in the MPV segment selling 3,908 and 1,220 units, respectively. But the new entrant, the Ford Everest case, which made its official debut in June, recorded amazing sales of 990 units. The Isuzu Hi-Lander and Toyota Hiace minibus followed selling 744 units and 733 units, respectively.

Market watchers attributed the growth in MPV sales to the increasing number of individual buyers looking for a vehicle suitable both for business and family use.

Winds of change

Though the 0-5 seater segment (sedan) saw only a decline of 0.6 per cent in year-on-year sales, market observers said that it would decline further as local assembled luxury sedans faced increasing and stiff competition from imported CBUs (complete built units).

According to the General Department of Customs, more than 15,000 CBUs were imported in the first nine months of this year, the biggest ever CBU car imports witnessed by the country.

Most of the CBU imports were luxury sedans and sport-utility-vehicles (SUVs) such as Lexus, Porsche, BMW series 7 and Audi, which competed directly in the market with local brands such as Mercedes-Benz E class, Toyota Camry, BMW 318 and 325 and Ford Escape.

"Rich people now prefer CBU imports instead of locally assembled luxury sedans as the imports are much more stylish and comfortable, available for prices within the reach of customers," said a director of a CBU car outlet in Ha Noi's Gia Lam District.

Despite locally assembled cars enjoying the preferential import tax of 20-30 per cent and the special consumption tax (SCT) of 40 per cent, their prices were nearly the same as a CBU import, which has to bear a 100 per cent import tax plus 100 per cent SCT.

Viet Nam has around 200 firms involved in businesses relating to manufacturing, assembling and repairing of automobiles, with 90 specialising in auto production and assembly. The country has about 750,000 automobiles compared to 12 million motorbikes.

Source: Vietnam Economy - GAI

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