Two bottlenecks restraining the auto industry
On June 30, 2021, the Ministry of Industry and Trade published a report on the situation of the automobile industry and proposed solutions to find a way. This report has pointed out two bottlenecks of Vietnam’s automobile industry today.
According to the ministry, the market capacity and the price difference between domestically produced cars and fully imported cars are the 2 biggest bottlenecks and challenges facing the auto industry in our country.
Currently, the size of Vietnam’s auto market is only 1/3 of Thailand’s and ¼ of Indonesia’s.
The report also showed that the market is small, fragmented by many assemblers and many different models, making it difficult for manufacturing companies (both auto and spare parts) to invest in large-scale production development.
On the other hand, the current GDP per capita of Vietnam is not enough for the majority of people to own cars as well as to promote the domestic automobile industry to develop and generate profits.
The weak traffic infrastructure (mainly due to poor traffic organization) has also significantly affected the market demand, making the economy’s demand for cars not able to grow up.
In addition, to market bottlenecks, currently the cost of producing domestic cars is 10-20% higher than that of other countries in the region, making the cost of domestically produced cars suffer many disadvantages compared to imported CBUs from ASEAN.
Components and spare parts for automobile production and assembly are mostly imported from abroad – incur additional costs of packaging, transportation, storage, insurance, etc., thereby affecting the cost of the car locally assembled vehicles solution to create a market
According to the Ministry of Industry and Trade, solutions to remove the aforementioned bottlenecks will include:
There are reasonable measures to ensure the transparent and healthy development of the domestic automobile market through technical barriers and measures to combat commercial fraud.
Ensure equal competition between imported and domestically produced vehicles in terms of product quality control.
In addition, it is possible to consider and consider a number of other solutions to develop the market such as preferential loans to buy domestic cars; review taxes and fees related to automobiles throughout the value chain to adjust in the direction of facilitation of automobile production and consumption, and healthy development of the domestic automobile market.
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