Vietnam’s passenger vehicle market has witnessed rapid growth compared to its ASEAN peers in recent years, growing at a compound annual growth rate (CAGR) of ~38 per cent during 2012-2016, while sales are expected to reach ~225,000 units by 2020, according to Solidiance’s latest white paper, “Driving Vietnam: Is Vietnam’s Passenger Vehicle Market Shifting Gears?”, which explores the growth drivers and challenges of the market and also highlights key issues that will shape the future of Vietnam’s passenger vehicle industry.
The surging demand for passenger vehicles has been driven by a number of factors, including macroeconomic growth, sociocultural trends, and an increasingly liberalized trade environment, with tariffs falling from 50 per cent in 2015 to 0 per cent by 2018 on passenger vehicle imports among ASEAN member countries.
Driven by strong economic growth of ~6.2 per cent in 2016, Vietnam has one of the region’s fastest-growing middle-income groups, which is now shifting towards four-wheelers.
Furthermore, passenger vehicles also serve as an important status symbol, evident in the strength of luxury brands.
The market for luxury passenger vehicles such as Mercedes in Vietnam is one of the world’s fastest growing.
But despite these opportunities, Vietnam’s passenger vehicle market faces certain barriers, including high taxes and fees levied to protect the local passenger auto industry as well as to reduce pollution and congestion; new regulations that will only favor small engine capacity passenger vehicles; and local manufacturing being limited by a shallow supply base, resulting in an increased reliance on imports.
Solidiance is a leading Asia Pacific-focused management consultancy trusted by Fortune 500 and Asian Conglomerates.
They advise CEOs on make-or-break deals, on defining new business models, and on accelerating Asia growth.VN Economic Times