Import cars will dominate the Vietnamese market?

With unsatisfactory sales result in 2010, a big worry about the increases of the imports on the domestic market in 2011 has appeared vividly to the members of the Vietnam Automobile Manufacturers’ Association VAMA.

In mid January, Citroen marked its returning to Vietnam’s market by marketing the Citroen DS3 model with many attractive features. Citroen cars are being distributed by CFAO, the leading car importer and distributor in Africa and territories belonging to France, which once served as the transitional step for the launching of Audi models on Vietnamese market in 2008. As planned, in 2011, CFAO will set up Automotive de France company which will be in charge of importing and distributing Citroen cars in Vietnam.

The appearance of one more car importer in Vietnam not only shows the attractiveness of Vietnam’s car market, but also shows the growing tendency of importing cars to Vietnam.

Five years ago, any time a new car model appeared on the market, buyers raised two questions: how high is the localization ratio of the car model and when the model would be made in Vietnam. However, nowadays, people do not care about if car models are churned out in Vietnam.

In January 2011 alone, the turnover from imported cars reached 107 million dollars, a double increase in comparison with the same period of 2010. The increase in imported cars was not a surprise to people at all, because Vietnamese people have the habit of purchasing cars and houses before Tet so that they can celebrate Tet with new assets. However, experts have pointed out that the recent car imports increases should be seen as a signal of a possible car import movement in 2011.

The demand for imported cars has become so big that even automobile manufacturers in Vietnam also try to import cars to sell on the domestic market, even though Vietnam’s market remains very small.

The recent launch of the Honda Accord by Honda Vietnam is an example. Honda has been very successful with its motorbike products, but it has not really successful with car products, even though Honda Vietnam’s factory in Vietnam has production lines using higher technologies than some other automobile joint ventures. Honda Vietnam has also been praised by Vietnamese agencies as having made a great contribution to the development of the automobile industry in the country.

However, the modest number of 3140 cars that Honda Vietnam sold in 2010, including 1827 Civics (the others sold were CR-Vs) showed the difficulties of doing business in Vietnam. Honda Vietnam decided to import Accords under the mode of complete built unit (CBU) to sell domestically, which shows that the manufacturer still cannot see opportunities for success if it assembles this model domestically.

Ford Mondeo has been assembled at Ford’s factory in Hai Duong province after imported cars were welcomed on the domestic market. However, analysts say the manufacturer does not see the opportunities big enough to increase output.

Importing cars to sell domestically has become the preferred choice of many automobile joint ventures.

Even Nissan Vietnam, which is joined the domestic car assembling industry by outsourcing the assembling of its cars to some existing factories in Vietnam, has also decided to import some new models to sell on the domestic market. Nissan Vietnam has marketed Nissan Navara model after it did not succeed with the Nissan Grand Livina model.

Mercedes Benz Vietnam has also been trying to distribute the car models made by Mercedes Benz Vietnam throughout the world. Of the total 30 car models the manufacturer is offering on the domestic market, the number of domestically assembled models is less than 10.