Vietnam’s passenger vehicle market has witnessed rapid growth compared to its ASEAN peers in the recent years, growing at a CAGR of ~38% from 2012 – 2016. Moreover, sales are expected to reach ~225,000 units by 2020. The country’s increasing population and a rising middle class with disposable income have fuelled demand for passenger vehicles as consumers begin to move away from traditional reliance on two-wheel transportation.
The surging demand for passenger vehicles has been driven by a number of factors, including macroeconomic growth, sociocultural trends and an increasingly liberalized trade environment with the tariffs decreasing from 50% in 2015 to 0% in 2018 on passenger vehicle imports among ASEAN-member countries.
Driven by strong economic growth at ~6.2% in 2016, Vietnam has one of the region’s fastest-growing middle-income groups which is now shifting towards four wheelers. Furthermore, passenger vehicles also serve as an important status symbol, evident in the strength of luxury brands. Markets for luxury passenger vehicles in Vietnam, such as Mercedes, are one of the world’s fastest growing markets among the affluent Vietnamese income group.
- But despite these opportunities, Vietnam’s passenger vehicle market faces certain barriers, including:
- High taxes and fees levied to protect the local passenger vehicle industry as well as to reduce pollution and congestion.
- New regulations that will only favor small engine capacity passenger vehicles.
- Local manufacturing limited with a shallow supply base, resulting in increased reliance on imports.
Solidiance’s latest white paper,“Driving Vietnam: Is Vietnam’s Passenger Vehicle Market Shifting Gears?”, explores the growth drivers and challenges of the market, and also highlights key issues that will shape the future of Vietnam’s passenger vehicle industry.
(Download the white paper by copy-pasting the following URL to your search bar: http://www.solidiance.com/whitepaper/download/is-vietnams-passenger-vehicle-market-shifting-gears.php)
Soldiance is a corporate strategy consulting firm with focus on Asia, from Dubai to Shanghai. We advise CEOs on make-or-break deals, define new business models and accelerate Asia growth. Through our 12 offices across Asia, we provide our clients with a better understanding of intrinsic regional issues.
Our industry experience is centered on the automotive and aftermarket sectors, with some of our strategy work focused on lubricants, car batteries, lighting, suspensions, brakes, coating, hydraulic lifts / pumps, rims, window films, sensors, high performance polymers, as well as helping clients in searching the right local OEM partner. Our Asiawide market entry and growth strategy services provide the required insights and the necessary roadmap to capture a profitable market share in the region.
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