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Category: Automotive

Retail News Asia is committed to providing both local and global retailers with the latest Auto and Car news throughout the Asian market. This on a daily base.

  • Tariffs are cut, import prices fall, but cars are still pricey

    Tariffs are cut, import prices fall, but cars are still pricey

    According to GDC, in January 2017 alone, Vietnam imported 1,000 cars from India, worth $3.7 million in total. The average import price was $3,700 only, or VND85 million, the price level described as ‘surprisingly low’ and ‘dirt cheap’. The imports from India are mostly Hyundai i10 and i20.

    However, Vietnamese cannot buy imports at VND85 million. The amount of money they have to pay will be four or five times higher.

    As explained by a car dealer, imports from India are taxed 70 percent. Besides, they are also subject to other kinds of tax, including luxury tax (35 percent for 1.0-1.5L cars) and VAT (10 percent).

    Imports also bear many other different kinds of fees, such as ownership registration fee (10-12 percent, or VND233-237 million), the number plate granting fee (VND20 million in Hanoi), registration fees (VND340,000 for the first time), and road maintenance fee (VND130,000 a month).

    At present, a Hyundai i10 is sold at VND350-450 million in the market, or five times higher than the factory price.As such, every import product from India would cost VND260 million on average after taxes and fees. Meanwhile, the selling prices will be defined after adding up distribution expenses, profits for distributors, storage fees, and marketing & advertisement costs.

    The same is occurring with imports from ASEAN. Though the import tariffs have been cut from 40 percent 30 percent since early 2017, the selling prices are still many times higher than the import prices.

    Nguyen Tuan, director of Thien An Phuc, a distributor, said a Toyota Fortuner from Indonesia has the CIF price of $27,500, or VND700 million. However, the selling price could be as high as VND1.3 billion.

    “Because of high taxes, Vietnamese have to pay high to own cars,” he explained, adding that the selling price in Vietnam is 2-3 times higher than in other regional countries.

    By 2018, when the import tariff goes down to zero percent, the price of one Fortuner would fall by VND290 million thanks to the tariff cut. Many people don’t buy cars at this moment, because they don’t want to waste hundreds of millions of dong on car tax.

    Ngo Tri Long, a renowned economist, said people hope the car prices would be decreasing once the tariffs are cut. However, sharp price decreases may not occur, because the car prices not only depend on import tariffs, but also on luxury taxes, fees and pricing strategies followed by car distributors.

    “In Vietnam, you’d better not dream of cheap cars,” he said.

  • Nissan, BMW, Porsche face fuel economy probes in South Korea

    Nissan, BMW, Porsche face fuel economy probes in South Korea

    South Korea has filed a complaint against Nissan Motor’s South Korean unit alleging that the Japanese car maker manipulated the fuel economy test results of its Infiniti Q50 sedan, a government official said on Tuesday.

    The transport ministry is also investigating BMW and Porsche on a similar matter, the official, Koh Sung-woo, told Reuters.

    The Seoul Central District Prosecutors’ Office has launched a probe into Nissan after a criminal compliant was filed by the ministry, a spokesman at the office said.

    Makers of imported cars, which have surged in popularity in recent years in South Korea, have been facing growing scrutiny in the country following Volkswagen’s emissions-test cheating scandal.

    The latest government action follows an announcement by South Korea’s environment ministry last month that the sale of 10 models of Nissan, BMW and Porsche had been banned after the carmakers were found to have fabricated documents on emissions and noise-level tests. The models banned include BMW’s X5M and Porsche’s Cayenne and Macan models.

    The probe was then expanded to whether the three car makers have falsified documents on fuel economy tests of the 10 models as well, Koh said.

    Koh said Nissan overstated the fuel economy of the Q50 so that it is 3.4 percent higher than the actual test result. “They manipulated the test results of the car to make the fuel economy look better,” he said.

    Nissan Korea said it reported “some inappropriate problems” in certification documents to authorities last year, saying the errors were caused by the misconduct of a manager at the company.  “We express sincere regret over those issues,” a spokeswoman said.

    Representatives of BMW and Porsche in Seoul said the companies have not been notified of the probe.

    The complaint adds to the troubles in South Korea for Nissan, which is already accused of cheating on emissions of its Qashqai diesel model. Last week, a South Korean court sided with the government which had said the Japanese automaker used a so-called defeat device in its Qashqai sport utility vehicle to turn off its emissions reduction device during regular driving.

  • Toyota sees plug-in hybrids catching on faster than conventional hybrids

    Toyota sees plug-in hybrids catching on faster than conventional hybrids

    Toyota Motor’s chairman, who led the development of the Toyota Prius, expects the latest plug-in hybrid vehicles will catch on with consumers far more rapidly than the original Prius did.

    Known as the “father of the Prius” for his role in popularizing the world’s best-selling hybrid car, Takeshi Uchiyamada said he expected to sell 1 million plug-in hybrids in less than 10 years, the time it took for sales of its conventional hybrid vehicles to hit that mark.

    “Environmental awareness has become a bigger issue today than it was 20 years ago, and demand for environmentally conscious products has increased,” Uchiyamada told reporters at an event to launch the latest plug-in version of the Prius in Japan.

    While the technology for plug-ins has developed rapidly, lowering costs, Uchiyamada said he had “no idea” exactly when plug-in sales would hit the 1 million mark. Since launching the original Prius, in 1997, Toyota has developed hybrid versions for around 40 of its models, and has sold a total of 10 million hybrid vehicles globally.

    Launching the second generation of the Prius PHV in Japan on Wednesday, Toyota said it expects to sell up to 60,000 worldwide a year, with more than half of the sales coming from Japan.

    Toyota set a similar target for the first generation of its plug-in Prius, of which only around 75,000 have been sold since its launch in 2012, largely due to its limited electric range of 26.4 kilometres.

    The latest version has a range of 42 miles according to Japanese standards. Due to a different methodology in measuring a car’s electric mode range, the vehicles’ range is listed in the United States as around 25 miles.

    Launched as the Prius Prime in North America late last year, the plug-in Prius will be introduced in Europe from March. Uchiyamada declined to comment on plans to offer plug-in versions of other models.

    The latest plug-in Prius sees Toyota widely endorsing lithium ion batteries, marking a turning point for the company which for years had resisted the technology commonly used in all-battery electric vehicles, due to concerns over their cost, size and safety.

    While rivals including Nissan Motor Co. and Tesla Inc. have marketed electric cars for nearly a decade, Toyota has promoted fuel cell-powered vehicles as the most sensible next-generation option to hybrids, although a lack of hydrogen fueling stations remains a major hurdle for mass consumption.

    But as more automakers develop electric cars in response to tightening global emissions regulations, Toyota late last year set up a new division to speed up development of long-range electric cars.

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  • Proton Iriz enters Indonesia

    Proton Iriz enters Indonesia

    Proton Holdings, via its Indonesian unit, PT PROTON Edar Indonesia (PEI), has launched its latest hatchback vehicle, the Proton Iriz in several cities in the republic.

    In a statement today, Chief Executive Officer Datuk Ahmad Fuaad Kenali said Indonesia is an important market for the national carmaker.

    “Not only have we maintained strong government-to-government relations being ASEAN founding members, but we also share many similarities in terms of people, language, culture as well as the weather,” he said.

    Ahmad Fuaad said Indonesia is the second country after Brunei to import the vehicle.

    He said two variants have been made available to the Indonesian market, namely the 1.3L MT Standard and 1.3L CVT Standard, priced at IDR 175,250,000 and IDR185,283,000, respectively (RM1=IDR 2996.52).

    The PEI is supported by a total of 25 sales and after sales outlets in Indonesia, and locals can get up close and personal with the Proton Iriz in all the sales outlets from Feb 20.

    Since its debut, the Proton Iriz has received many awards and accolades from the automotive industry in Malaysia. Among them, is a 5-Star rating from the Asean New Car Assessment Programme.

    Interested customers can visit any of the dealers at their showrooms across Indonesia or visit the PEI website at www.proton-edar.co.id.

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  • Multi-million dollar tax arrears catch up to luxury car importers

    Multi-million dollar tax arrears catch up to luxury car importers

    At the end of December 2016, Mercedes-Benz Vietnam (MBV) paid VND101.65 billion ($4.46 million) in tax arrears.

    However, the firm continued to submit letters of complaint about its initial tax assessment.

    The Post Clearance Audit Department of Vietnam Customs under the General Department of Vietnam Customs, Ministry of Finance, previously in June 2016, issued a decision of post-clearance audit in MBV’s headquarter.

    The department then imposed arrears of VND101.65 billion ($4.46 million) on the firm. Right after, MBV submitted an urgent letter asking for reconsideration.

    In December 2016, the General Department of Vietnam Customs has requested the provincial and municipal customs departments to allow the company to register and import under customs procedures, as long as they paid 50 per cent of the amount up front and the rest by December 31, 2016.

    In December 26, 2016, MBV has paid the whole VND101.65 billion ($4.46 million) and continued to import goods under customs procedures.

    However, on December 30, 2016, MBV submitted a letter of complaint about the initial tax assessment.

    Tan Thanh Do Auto Corporation (Land Rover and Jaguar dealer in Vietnam) and Regal Motor Car Corporation (official Rolls Royce dealer in Vietnam) found themselves in a similar situation.

    In November, they were requested to pay additional tax arrears of VND719 billion ($31.56 million) and VND50 billion ($2.19 million), respectively, because they declared a lower value of their imports than the actual price.

    Besides, at the end of November 2016, the Ministry of Finance has requested the General Department of Vietnam Customs to suspend customs clearance for imported BMW automobiles (except for the BMWs imported under diplomatic privilege).

    At the same time, the Anti-Smuggling and Investigation Department has decided to take Euro Auto Company, the Ho Chi Minh City-based importer of BMW automobiles, to court for failing to supply required documents or supplying fake documents during customs clearance and selling cars before they are cleared at customs.

  • Japanese automakers consider leaving Vietnam due to weak supporting industries

    Japanese automakers consider leaving Vietnam due to weak supporting industries

    The companies are looking for bigger profits in nearby countries such as Thailand. Japanese automakers may be shifting their production away from Vietnam in the near future due to its poor supporting industries.

    Vietnam’s supporting industries have stood still for years and that might cause Japanese companies in the country to change their investment approach, said Takimoto Koji from the Japan External Trade Organization (JETRO), a Japanese government-related organization that works to promote trade and investment by Japanese businesses overseas.

    Several automakers intend to stop assembling cars in Vietnam and import whole cars from nearby countries like Indonesia, Malaysia and Thailand instead, Takimoto said.

    Car import tariffs between Southeast Asian neighbors are falling rapidly and the new approach will secure bigger profits, he said.

    Under a new free trade agreement among the 10 members of ASEAN, car import tariffs were cut from 50 percent to 40 percent last year and will go down to 30 percent next year before being scrapped in 2018.

    Japanese companies Toyota, Mazda, Honda and Suzuki are competing in Vietnam’s auto industry, which produces around 250,000 cars a year, a modest number compared to those in nearby countries such as Thailand’s two million cars.

    According to experts, an automobile production line only becomes profitable when it delivers more than 200,000 cars a year.

    Japan registered $2.58 billion in investments in Vietnam last year, accounting for more than 10 percent of the total FDI pledges made in the country and making it the second biggest foreign investor after South Korea, according to figures from the Ministry of Planning and Investment.

    Vietnam’s FDI inflow hit a record high of $15.8 billion in 2016.

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  • Made-in-China truck sales lose ground in Vietnam

    Made-in-China truck sales lose ground in Vietnam

    Made-in-China trucks which had once dominated the Vietnamese market are facing the slow sales since early 2016. According to the General Department of Customs, import of made-in-China trucks into Vietnam reached a record high of 26,700 units in 2015 worth a total USD1 billion compared to 13,700 units worth USD530 million in 2014.

    However, since early 2016, the sales of Chinese trucks have considerably fallen in Vietnam. The General Department of Customs reported that only 10,900 Chinese trucks had been imported into Vietnam in 2016 and this figure reached just 94 units in January of 2017 compared to 1,700 units in January 2015.

    Explaining about the surge in Chinese trucks imported during the 2014-2015 period, owner of an auto-agent in Hung Yen Province, said that it was low prices which attracted customers. Meanwhile, Vietnamese auto agents could owe payments for buying Chinese trucks for between 6 months and one year.

    In early 2014, the Ministry of Transport issued a regulation to tighten control over overloaded vehicles also helped to fuelled the import of large-sized Chinese trucks.

    Earlier, trucks were allowed to transport larger quantities, 2-3 times over their load capacity. But they will be fined heavily if they carried that much now with the new policy. So as to carry the same amount of goods as before, local transport firms had to increase the number of trucks.

    The slow sales of Chinese trucks in Vietnam are also attributed to the stronger competition from rivals. More trucks produced by South Korea’s Hyundai, Japan’s Hino, Russia’s Kamaz and German’s Shacman are all being sold in Vietnam with more affordable prices.

    Many showrooms of made-in-China trucks have been set up along National Highway 5A, however, over the past year, they have sold only a few units.

    Representatives of a showroom in Hai Duong Province said despite low prices, the company sales of Chinese trucks have been on the sharp fall, which is partially due to quality which is not good as those made by South Korean, Japanese or European firms.

    After being imported into Vietnam, many Chinese trucks have their bodies extended for the higher loading capacity, which is aimed to meet the Ministry of Transport’s regulations and this also seriously affects the trucks’ life-span.

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  • Bus-assembly line fire inflicts $11m loss

    Bus-assembly line fire inflicts $11m loss

    A fire that broke out at two sites of a bus assembly plant early this month destroyed spare parts and components worth VND250 billion (US$11 million). A bus is assembled at its plant by the Truong Hai Automobile joint stock company (Thaco) in Quang Nam Province. Production was resumed nine days after a fire broke out at the plant on February 2.

    The assessment was revealed by Chairman of the Truong Hai Automobile Joint Stock company (Thaco), Tran Ba Duong, at a press conference on Sunday in central Quang Nam Province, where the plant is located.

    He said initial investigations point to the fire being caused by short-circuits.

    The fire broke out on February 2 after working hours at around 6pm at the Chu Lai-Truong Hai Auto Manufacture and Assembly Complex and blazed for around three hours.

    Components and accessories stored in the 5,400sq.m assembly workshop were burnt, Duong said.

    He said over 1,000 workers in the complex and firemen from Quang Nam, Quang Ngai, Da Nang, soldiers and staff of the Chu Lai Airport joined hands to stamp out the fire and remove components out the workshop.

    The plant resumed operations on Sunday after an initial investigation and recovery, he added.

    “The fire was out of reach of the plant’s automatic extinguishing system. It took four hours to mobilise a large fire-fighting force and extinguish the blaze,” Duong said.

    ‘Our fault’

    “It’s our fault that we collected components and accessories to service big orders while a new production line was under construction,” he said.

    Duong said Thaco had an insurance deal with the HCM City-based Bank of Investment and Development Bank (BIC) and Da Nang-based PVI for a total of VND638 billion ($28.2 million).

    He said BIC had asked an independent unit, Viet Nam International Adjuster (VIA) to assess the damage.

    The accident is still under investigation and final results will be announced after the probe is completed, he said.

    Also present at the conference was Dinh Van Thu, Chairman of the provincial People’s Committee. He said the fire was a lesson in fire prevention not only for Thaco, but other companies in the province’s industrial zones.

    Thu said Prime Minister Nguyen Xuan Phuc had asked the province to speed up the investigation and help the business resume production soon.

    The Thaco chief said the fire had delayed delivery of buses by three days to seven days.

    Thaco has invested US$400 million in constructing the Chu Lai-Truong Hai Industrial Complex, which has a logistics centre, car production factories, a vocational training college, a seaport, storage facilities and shipping services.

    Last year, Thaco earned total revenues of VND65 trillion ($2.8 billion), a 40 per cent growth, contributing VND18 trillion ($796 million) to the State budget.

    The nation’s biggest automaker plans to build three more plants with the total annual capacity of 215,000 trucks, vans, commercial cars, and achieve a localisation ratio of 16 per to 46 per cent.

    It currently manufactures and distributes Korea’s Kia model, Japan’s Mazda and France’s Peugeot. It has exported its cars to Laos, Cambodia, Myanmar and Columbia.

    Thaco plans to earn revenues of VND71 trillion ($3.1 billion) this year, equivalent to two per cent of the country’s Gross Domestic Product.

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  • China to build more charging points for electric vehicles

    China to build more charging points for electric vehicles

    China plans to build 800,000 charging points, including 100,000 public ones, for electric vehicles this year to meet increasing demand, the National Energy Administration (NEA) said Thursday.

    A total of 100,000 public charging points have been installed nationwide in 2016, bringing the total number of public charging points in China to 150,000, according to the NEA.

    A total of 14,000 kilometers of highway has also been equipped with inter-city fast-charging stations, with an average spacing of 48.6 kilometers.

    Electric vehicles consumed more than 1.2 billion kilowatt-hours of electricity in China last year, saving about 400,000 tons of fuel, according to the NEA.

    In Beijing and Shanghai, a charging facility can now always be found within a radius of less than 5 km, while other major cities such as Guangzhou and Shenzhen are working toward this goal.

    “For the new year, China will work to solve the payment and information-related problems for charging facility operators and implement a unified national standard for charging ports of electric vehicles,” said the NEA.

    According to China’s 13th Five-Year Plan (2016-2020), the country will build a nationwide charging-station network that will fulfill the power demands of 5 million electric vehicles by 2020.

  • BMW Group achieves new sales record in China in January

    BMW Group achieves new sales record in China in January

    German automaker BMW Group announced on Friday that its sales in China achieved double-digit growth in January, hitting a new record.

    A total of 51,345 units of the premium brands BMW and Mini have been delivered to Chinese customers, representing a year-on-year increase of 18.2 percent.

    It is the first time the Bavarian automobile company delivered more than 50,000 units in a single month in China, the largest market in Asia for BMW Group, the announcement said.

    In January 2017, a total of 163,288 vehicles were sold worldwide, an increase of 6.8 percent year-on-year. Among them, 21,219 vehicles were delivered to customers in the United States, down by 0.5 percent compared with January 2016.

    “We’ve started the year well. We’re confident that the new models we’re bringing to market this year will ensure further momentum as the year goes on,” said Ian Robertson, member of the board of management responsible for sales and marketing.

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  • ‘Lucky’ license plates set to go under the hammer in Vietnam

    ‘Lucky’ license plates set to go under the hammer in Vietnam

    Channeling people’s love of lucky numbers into the state budget: Why not? Vietnamese people are die-hard fans of lucky numbers and are ready to pay a hefty price to obtain license plates or phone numbers with “meaningful” strings of digits.

    In that context, Vietnamese authorities have been pushing the country’s legislature for a new circular that would legalize the auction of personalized license plates to raise funds for the state budget.

    The Traffic Police Department under the Ministry of Public Security has been advocating the auction of license plates for many years but to no avail due to conflicts with the existing Property Auction Law, under which license plates are not listed as valid objects for auctioning.

  • Vietnam’s car imports soar in January as tariffs fall

    Vietnam’s car imports soar in January as tariffs fall

    Tariffs on car imports from ASEAN countries will be fully removed by 2018. A growing middle-class population, rising disposable incomes and falling tariffs on cars imported from neighboring countries in Southeast Asia appear to be driving Vietnam’s car market.

    The country’s car imports in the first half of January soared 50 percent from the same period last year to about 5,000 units worth $116 million, customs data shows.

    This surge in imports is mainly due to a switch from motorbikes to cars. Around 75 percent of imported cars were classed as midsize sedans and the number of vehicles with nine seats and below nearly tripled from a year ago to more than 3,000 units.

    Vietnam still relies heavily on imported automobiles to meet domestic demand despite a slight year-on-year decline in 2016 to 113,567 cars after it imported a record-breaking number of 125,534 units in 2015, according to customs statistics, equivalent to a 77 percent jump from 2014.

    Since the Vietnamese government has targeted car manufacturing as a “spearhead industry”- one of the economy’s driving forces – car import taxes have remained high to shield domestic automobile producers from foreign rivals.

    However, following the ASEAN Trade in Goods Agreement, Vietnam will cut tariffs incrementally over the next few years on imported cars from ASEAN countries. With the tariff scheduled to be fully removed by 2018, import turnover from ASEAN neighbors is expected to increase exponentially.

    The tariff on cars from Thailand and Indonesia has been cut to 30 percent from 40 percent, effective at the start of this year, according to tax authorities. As a result, many imported cars will be 7 percent cheaper than previously.

    New cars imported from Thailand dominate the market, with Mazda, Toyota and Ford among the most popular.

    Sales of used cars are slowing, said the association of automobile manufacturers.

    The number of imported new cars from ASEAN countries is on the rise due mainly to relaxed tax policies, including lower import tariffs, value added tax and special consumption tax, which will benefit import companies and authorized dealers, said a car dealer in Hanoi.

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  • SKT, Ericsson, BMW achieve 3.6Gbps for 5G connected car trial

    SKT, Ericsson, BMW achieve 3.6Gbps for 5G connected car trial

    SK Telecom achieved what it says is the world’s fastest 5G speed for a connected car during a demonstration conducted with Ericsson and BMW Korea.

    SKT said the trio has successfully tested its pilot 5G network on a connected car running at 170 kilometers per hour, reaching a 3.6Gbps transmission speed over the 28-GHz band.

    The demo was conducted at the German car maker’s driving center in Yeongjong Island, Incheon, where the trio first successfully tested its pilot 5G network for multi-vehicular communications last November.

    SK Telecom said with 5G avoiding obstacles is difficult at high speeds, but the operator achieved this through the application of advanced beamforming and beamtracking technologies.

    “Connected car is regarded as the barometer for 5G as it can only be realized through the combination of all 5G technologies. As ultra-high speed and ultra-low latency are prerequisites for realizing autonomous driving and immersive media services, the 3.6Gpbs transmission speed we successfully demonstrated today not only brings us a step closer to realizing autonomous driving, but will also have a great impact on a broader range of industries,” SK Telecom said in a statement.

    The demo significantly enhances the stability of connected car services by improving image recognition and V2X (Vehicle to Everything Communication) technologies, the operator added.

    “That is, a vehicle will be able to communicate, in real time, with other vehicles, traffic lights and surveillance cameras to understand and respond to unexpected situations and obstacles… in a much shorter time.”

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  • BMW to invest RM126mil to build PHEVs in Thailand

    BMW to invest RM126mil to build PHEVs in Thailand

    It appears that the production of BMW plug-in hybrid models in the region is set to increase, with BMW Group Manufacturing Thailand set to invest 1 billion baht (RM126.2 million) in the production of petrol-electric vehicles at its plant in the Amata City Industrial Estate, Rayong.

    The investment has been earmarked for the improvement of line operations there, in order to facilitate the increase of plug-in hybrid production. Of that amount, 488 million baht (RM61.6 million) has already been spent to kick off production of these vehicles last November. The company has spent 3.7 billion baht (RM467 million) on the plant from 2000 to 2015.

    The rest of the investment will be used to double the production capacity in Thailand this year; the company currently builds 20,000 BMW and MINI cars and 10,000 BMW Motorrad motorcycles a year. President of BMW Group Thailand Stafan Teuchert said that the two-year investment is meant to prepare for future demand both domestically and abroad, with Munich seeking any opportunity to export vehicles from Thailand.

    The company has exported a limited amount of cars to Malaysia since 2006 and around 1,000 motorcycles to Malaysia and China since 2015, but began shipping large amounts of completely built up (CBU) X3s and X5s to China last year. It aims to export 10,000 units of those models in 2017 – mostly to China – and is also eyeing other markets in ASEAN for opportunities.

    Locally, BMW plans to bring in more advanced technology to build plug-in hybrid batteries in Rayong by mid-2018, further reducing retail prices in Thailand. The company currently imports the batteries from Europe.

    Existing Thai-built BMW plug-in hybrids include the 330e Luxury and X5 xDrive40e M Sport, priced at 2.59 million baht (RM326,900) and 4.69 million baht (RM592,000) respectively – around 490,000 baht (RM61,800) and 690,000 baht (RM87,100) lower than if they were imported. Teuchert said that the company plans to produce the 740e this year and the 530e in 2018.

    In order to support the increase in the number of plug-in hybrid vehicles in Thailand, BMW plans to increase the number of charging stations in Bangkok to 12 this year, up from the current five. It expects sales of electric cars, mainly PHEVs, to rise from 5% of total car sales to 15% in 2017.

    Meanwhile, BMW currently assembles the 330e Sport, 330e M Sport and X5 xDrive40e in Malaysia, priced at RM248,800, RM258,800 and RM388,800 respectively, on-the-road without insurance. It also expects to export the 3 Series, 5 Series and 7 Series from Malaysia to Vietnam and the Philippines from next year.

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  • Vietnamese crazy about cars, manufacturers rush to sell

    Vietnamese crazy about cars, manufacturers rush to sell

    Car trading in 2016 saw the number of projects in the sector increasing sharply. About 505 projects in the field were licensed, ranking second in terms of foreign direct investment (FDI), just after real estate, according to the Ministry of Planning and Investment (MPI).

    The representative of a foreign-invested automobile manufacturer said previously, FDI capital flowed into production and assembling, but now, it pours into retail and post-sale services.

    He said foreign investors all can see great potential in Vietnam, where the demand has been increasing rapidly. There is a big wave of foreign investors coming to Vietnam to work as distribution agents for manufacturers.

    Sources said some auto manufacturers have finalized the list of distributors for the years from now to 2023, i.e that from 2017, they will only consider appointing distributors for the years from 2024.

    From January 1, 2018, the tariff on the imports form ASEAN will be cut down to zero percent. Under free trade agreements, the tariffs on CBU (complete built unit) imports will also be decreasing step by step. By 2026, nearly all the tariffs will be lowered to zero percent before Vietnam fully opens its market by 2029.

    About 30 leading brands are present in Vietnam. However, most of them still don’t have large distribution networks. The biggest brand has 40 sales agents throughout the country. The Central Highlands and the western part of the southern region –  potential market areas – still have not been exploited.

    Automobile manufacturers understand that expanding distribution networks is the best solution to improve revenue. Therefore, they applaud the FIEs joining the distribution market.

    Mercedes Benz, Audi, BMW, Toyota, Honda, Mazda, Ford, Hyundai, Kia and Mitsubishi  have opened a series of authorized distribution agents recently.

    It is expected that by 2029, Vietnam market scale would be about 1 million brand-new cars a year with revenue of $12 billion.

    Vietnam is among the fastest growing markets in the region. Over 300,000 cars were sold in 2016, an increase of 24 percent over 2015. Experts have predicted the growth rate would be 20 percent in 2017 thanks to the tax cut and lower car prices.

    An analyst said there were clear opportunities to make money from selling cars as import tariff cuts would make cars cheaper and more affordable to Vietnamese.

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