Vietnam’s small auto industry ‘destined to grow’

Motor Image Vietnam general director Jonathan Tan tells Thanh Nien Weekly his firm’s introduction of Subaru in Vietnam will be supported by a middle class that has continued to buy up cars despite the economic crisis.

Subaru is still a new brand for Vietnamese consumers, so what marketing strategies will you deploy in Vietnam? Will Subaru establish a factory here or just import cars for sale?

Jonathan Tan: Though Subaru is relatively new in Vietnam, it’s already a very well known and established brand in the world. And the fact that the Motor Image Group is representing Subaru in Vietnam and nine other countries and territories in Southeast Asia to promote and market the brand through joint regional events and promotional activities will be our strength.

Already in our regional activities is the Regional Impreza Palm Challenge, a high-profile cooperation with the Singapore Media Corp jointly organized with all participating regional countries.

Subaru’s supremacy and Motor Image’s success is testified strongly by the team’s fourth successive win at the APRC (Asia Pacific Rally Cross). On the other hand, we are also noted for our social contributions through charity works and environmental conservation activities. Our well established international name and the high quality of the car itself can create a new, well known brand name in Vietnam in very near future.

Subaru is a fully imported Japanese made car in all other countries currently. Studies with our factory, Fuji Heavy Industries, on CKD development in this region is a possibility in the near future. We will consider it seriously.

Vietnam’s car market is small compared to other markets in Southeast Asia, so why is Subaru keen on establishing a large presence here?

Vietnam’s auto industry is destined to grow with the fast development that the country has shown in the past 10 years. As for the Motor Image group, we see the growth potential through the very sharp growth of the Vietnamese economy. The proof is that although the world’s economy is affected deeply by the economic crisis, Vietnam’s economy is still growing.

One more important reason for our decision is that we see future opportunities here. It is not only the upper-class that has demand for cars, but also the middle-class. The number of middle-class people owning cars is increasing quickly. Therefore we’ve well invested in this region and committed to seeing it through in our long term plans.

Vietnam is a young country in terms of its population (70 percent is under 40), which means Vietnamese prefer fashionable car styles to utilitarian ones. Can you estimate how difficult it may be to entice this customer segment?

Subaru is actually very popular amongst the younger generation for its power, sportiness, and cult following. So we don’t see it being difficult to attract the younger population. However, Subaru has developed a wider range of models and now it’s a car that’s more family oriented, has a business status and is also utilitarian... These provide the owner with safety and confidence.

As for the unique issue of a large population of young people in the workforce who are hungry to excel and improve their lifestyle, it’s only a matter of time before cars will be a sought after item.

Subaru is a high performance, high premium and top safety car. This car will not only help the owner impress the crowd, but also show the special and unique characteristics of the user: strong and stable. Each car brand name has its own advantages and disadvantages, but our advantages have been determined through years with the increasing number of loyal customers each month no matter what the economic situation is. I believe young and active Vietnamese will accept our style quickly. Time will prove this.

Can you compare briefly the Vietnamese car market with other markets in region? What, in your opinion, should the government do to develop the Vietnam market?

Improve the infrastructure, reduce motorbikes and set policies that encourage more cars on the road. China was the same 15 years ago. Now they’re one of the biggest growing auto markets in the world... because of the above policies I’ve mentioned. And it has to be a long term plan with investment support from the government.

Vietnam’s market for cars is already growing very well under the control of your government. They always have good methods to do this. We see, understand, and believe in the government’s method of running the market. However, it is also good to have policies to seek and encourage foreign investment in joint ventures and develop infrastructure.

Imported cars face many obstacles and unfair competition when they compete with locally-assembled cars in Vietnam. What do you think of this competition and do you think the government should open the market wider?

It’s logical to protect and support local cars assemblers for the investment that they have put into the country. But the current duty on imports is too high. If the government can bring it down to ensure fairer competition, it will bring down the prices of cars in general and make them more affordable to the general public.

I believe the government will widen the market when the time is right. Personally, I hope, of course, that this happens early.

The government’s decision to delay a cut in import taxes due to poor infrastructure will keep car prices in Vietnam higher than any other market. What is your view?

It’s definitely not encouraging for the auto market because the prices of cars in Vietnam are inflated by taxes. All auto dealers want to sell their cars cheaper and pass on the savings to the customers. The government should expedite development of infrastructure in the country as this is key. A clear and open foreign investment policy will also be needed. The Vietnamese market will have more advantages if people can afford to purchase cars more easily than at present. However, as mentioned above, we must believe in government’s way of regulating and follow it. The time that Vietnamese can purchase good things at suitable prices will come very soon.

Any other comment?

The changes in Vietnam’s automotive industry are quite unpredictable. However, Vietnam is still a very big and potential market for all car brand names. What should come will come early. When people have the need to use cars in daily life, they will use it no matter how high the price is. Vietnamese people deserve to enjoy good products at suitable prices. We are here for this.