Tough competition
The domestic automobile market has shown signs of recovery after automobile joint venture companies launched new models at competitive prices last month. In addition to Toyota Vietnam’s Innova and Mercedes-Benz Vietnam’s Sprinter, Honda Vietnam introduced a new model Civic which has been recently named "2006 Car of the Year" by Motor Trend Magazine in the US.

The new Civic model is expected to change the market share of automobile joint venture companies in Vietnam as Honda products have been familiar with Vietnamese consumers for years. With selling prices at US$31,500-37,000 for 1.8L and 2.0L units, Honda’s Civic is the main competitive rival of Toyota’s Altis and Ford’s Focus which sell for US$35,000-40,000, respectively. Several days after its debut, nearly 30 Civic units had been sold.

Meanwhile, JRD Vietnam plans to launch a new multi-functional model JRD Daily SUV III priced at US$17,900-18,900 on to the market this September. The new car was introduced at the Vietnam Autopetro exhibition in HCM City last month. With its determination to penetrate the lucrative Vietnamese market, JRD is expected to become a potential competitor in Vietnam as similar products of well-known groups are priced at a double.

Chinese automobile makers do not want to miss the golden chance by marketing competitively cheap models such as four-seater CKD Lifan 520 imported by Bao Toan company and another kind of four-seater sedans assembled by TRUONG THANH company. These sedans are offered at between US$11,000-16,000.

Seeking new direction
However, Vietnamese consumers are still waiting for low cost automobiles especially when more and more second-hand vehicles are imported into Vietnam.

After a regulation to allow the import of five-year used automobiles came into effect, old luxurious vehicles have been imported through Hai Phong, Cai Lan, Ho Chi Minh City and Da Nang ports. In early September, some 100 second hand automobiles have been imported, and the figure is expected to hit 500 by the end of this year. Most imports have the low capacity like 1.0L Kia Morning and luxurious ones such as BMW, Mercedes and Lexus which are not locally assembled.

Despite being second hand automobiles, their prices are not so cheap since locally-made new cars are not as “smart” as high-class used ones. Therefore, the domestic automobile market has not yet offered “reasonable” prices as expected.

In the face of tough competition and difficulties, it is imperative for enterprises to adopt measures to reduce production costs and improve the quality of products while seeking more outlets.

Vinamotor Corporation is a case in point. The company has paid attention to improving the quality of busses and trucks, and is teaming up with other partners to mobilise capital for overseas projects. Vinamotor has so far exported 40 vehicles to Africa.

According to a representative of Vinamotor Management Board, intensifying investment overseas will help the corporation save transport fees and expand export markets.

Regarding the future of the automobile industry in the coming time, Deputy Head of Metallurgy and Chemical Engineering Department under the Ministry of Industry Ngo Van Thu said that enterprises which have proper plans for investment and technological transfer will be able to stand firm on the market. On the contrary, they will be expelled from the market after a short period if their operations prove ineffective.

Source: VOV