Which car for Vietnam? Ours, say manufacturers

VietNamNet Bridge – Manufacturers at a recent meeting couldn’t decide which car was most needed in Vietnam.

The Ministries of Finance (MOF) and Industry and Trade (MOIT) on October 8 met representatives of domestic automobile manufacturers to ask which models would be suitable for future development.

The Vietnam automobile industry development strategy stipulates that in 2004-2010, Vietnam will focus on developing trucks and buses. However, after that it will move on to cars with less than nine seats.

It is expected that by 2010, the number of cars made in Vietnam with four to nine seats will reach 10,000 – enough to meet 15 percent of the demand. The figure is expected to rise to 1.5 million by 2020.

The meeting started well with everyone agreeing models must be environmentally friendly and fuel efficient. They should also have a low production cost.  It should also be possible to manufacture them in large numbers with export in mind.

However, they could not agree on the details regarding cylinder capacity and number of seats – the two most important details which affect the tax rate.

Toyota Vietnam thought Vietnam should focus on developing car models with 4-9 seats. They argue that such models fit both families and offices, do not consume much fuel and have reasonable production costs.  The manufacturer has been heavily investing in such models.

General director of Truong Hai Automobile Corporation Tran Ba Duong suggested smaller cars with less than five seats and a cylinder capacity of under 1.5L.  He said these models were suitable for cities and do not consume much fuel or take up much space.

Duong also suggested lowering the luxury tax rate from 45 to 35 percent for less than 1.5L models, while suggesting raising tax for  big cars of 4.0L and higher.

Duong also proposed halving ownership registration tax and VAT on strategic models.

Meanwhile general director of Xuan Kien Automobile Corporation Bui Xuan Kien thinks it would be better to choose models with a cylinder capacity of less than 1.0L and less than five seats

“Our survey showed that 6-9 seaters now just account for 15 percent of total cars in circulation, while they take up so much space,” he said.

Deputy general director of Mercedes Vietnam Nguyen Chi Cong also said models with five seats should be prioritised for development.

With such a high prize at stake manufacturers are expected to continue to argue. Meanwhile domestic manufacturers continue to be heavily criticised for setting sky high sale prices and breaking promises.

The manufacturers, on being granted a license in Vietnam, made commitments regarding locally made content in products and on local investment.

However, according to automobile expert Nguyen Duc Phu, the manufacturers have broken promises.

Ford recently set up a $10 million production line in Vietnam, while making a $500 million investment in Thailand, he said.

VietNamNet/VNE

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