It is believed that the sales growth may prove the development of an industry; however, the trend in auto industry is a different story. In spite of the blooming of auto market, the auto industry, especially the manufacturing of spare parts still remains unchanged.
For the first months of the recent years, the Government and relevant agencies have issued guidance documents concerning orientations of this auto industry. But until now, no specific decisions on which direction the industry will follow have been made, especially when commitments on import tariffs in Asean Free Trade Area (AFTA) are nearly completed and the question of whether or not the auto industry should be mentioned in Free Trade Agreement (FTA) among some countries is controversial.
Long – term growth rate
Most specialists, auto firms’ representatives and individuals affirm that the auto market would certainly witness a considerable growth with full of potential. It is an inevitable trend, a competitive advantage to promote the auto industry.
According to statistics from sales reports of the Vietnam Automobile Manufacturers Association (VAMA), this is the 11th consecutive month that sales of the entire auto industry is higher that in the same period of the previous year. The sale in 2014 is forecast to reach 120,000 units, increasing by nine percent compared with 2013. More importantly, auto enterprises gain this success thanks to their own efforts but not to the Government’s long – term policies (apart from reducing advance fee in Hanoi and Ho Chi Minh City). So, what are the efforts of enterprises and brands? The most obvious is the launch of new model products with reasonable price.
Needless to mention the successful release of new products in the whole year 2013, in March 2014, many auto makers, especially the leading ones, added more competition by introducing new products. Ford Vietnam, for instance, launched Eco Sports model in Thailand and it is expected to be available in Vietnam in June (Ford Motor Company has implemented One Ford plan in which they sell products with the same quality everywhere worldwide). Truong Hai – a wholly domestic invested auto-maker has also introduced a strategic New Sorento model 2014. The engine system and chassis of this new model are the same as those of Hyundai (Santa Fe); however, many other new functions make it more modern. It is expected that Thaco, this year, will continue to launch about five new products branded Mazda, Carens or New Morning. A series of other auto brands in Vietnam have planned for their new launches. Representatives of these automakers state that the fluency of launching new car models in Vietnam is very “integrated”, which means that any of new vehicles was born in the world, Vietnam is considered one of the first markets to introduce.
When could Vietnam solve those problems?
The market is full of potential and will certainly continue to grow stronger because of great demand, especially in the context of strong economy in Vietnam. That is not including the explosion of growth in a market perspective as the time AFTA is carried out in ASEAN is coming nearly to the level of 0-5 percent taxation on importing whole car, spare parts and components. However, in the opposite side, Vietnam’s auto industry and manufacture are at a standstill, and the main cause is the failure in planning and finding new solutions. An expert affirmed that there are only two options: the first is to stop the development of the auto industry then focus on assembling, importing and trading. The second is that if the industry is kept developing, we have to promptly decide what to do and which enterprises and who are supported? These issues are in an urgent situation, but until now there are no concrete answers.
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Not only AFTA, many auto companies are now worried facing with FTA commitments between Vietnam and involved countries and the participation in TPP, if it includes the automotive industry.
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In fact, two above options are set out based on the root causes which mainly lie in the dependence on the management of big auto firms in the world. If the domestic enterprises desire to develop their production, first and foremost, they have to take into account how to participate in the global value chains. This is not simple, because no automotive manufacturer in the world can run their business without the participation of many other international enterprises. So the question is why the Vietnam’s companies in the fields of auto, automotive spare parts, components find it difficult or incapable to participate in production, supply chain and global value chain of carmakers, even the large firms all over the world has come to Vietnam, whether under the form of joint venture or direct investment .
Although it’s hard to seek general solutions to the development of the industry, companies themselves have found their ways to survive. At a recent press conference, a representative of a Vietnam’s leading automotive company confirmed: “Despite a lot of difficulties, we are not so worried about the implementation of AFTA”. This confidence results from their selections for certain firms, brands and their effective participation in global value chains. For example, in order to produce some accessories and spare parts, Vietnamese companies are unable to fulfill these tasks but need the support of others countries. Producing auto even includes making the smallest and least important components. The important thing is that this production is in need of the cooperation of many enterprises globally and enterprises in brand system. Producing, distributing and selling a car, a spare part, a component are no longer implemented by a company, a country, that is the participation of a regional and global system. Now, it is probably the most imperative thing to realise the importance of long-term, little changeable orientations, especially in wide and deep integration trend, but not making trouble ourselves by wondering whether should and can do it or not.
L.A
Vietnamese
