VIETNAM AUTOMOBILE INDUSTRY REPORT Q1/2018

Transcription

1 VIETNAM AUTOMOBILE INDUSTRY REPORT Q1/2018 1

2 Abbreviations OICA Organisation Internationale des Constructeurs d'automobiles (International Organisation of Motor Vehicle Manufacturers) GDVC General Department of Vietnam Customs GSO General Statistics Office MOIT Ministry of Industry and Trade UN Comtrade United Nations International Trade Statistics Database VAMA Vietnam Automobile Manufacturer Association VAMI Vietnam Association of Mechanical Industry VIRAC Vietnam Industry Research And Consultant 2

3 Content Executive summary Scale and characteristics Business environment Industry value chain Macroeconomics Industry position Legal barrier Production Consumption World automobile market Import Spare parts Automobile prices Production Risks and Challenges Consumption Driving forces Import - export Planning Top typical countries Enterprise Vietnam automobile market 41 3

4 Executive summary The world's auto production workshops are still located in three traditional areas, with the early auto industry born in North America, Western Europe and East Asia. The automobile industry in Vietnam today is largely stopped at simple assembly. The localization rate is around 7-10%. The newly promulgated Decree 116/2017 / ND-CP on Production, Assembly and Trading of Automobiles is expected to create new opportunities In the development of production activities of automobile companies right in Vietnam instead of yielding to imported cars. After a strong growth period from 2013 to 2016, production and assembly of domestic cars in 2017 saw a sharp decline when reaching only thousand vehicles, down 11.5% over the same period in

5 Executive summary average. charge of 395 million VND/unit. In 2017, Vietnam's automobile consumption was estimated at 272,750 units, down 10% from the same period last year, According to VIRAC estimates, the car ownership per 1,000 people in Vietnam in 2016 (31 cars) is still low compared to other countries in the region as well as in the world. In addition to the risks of policy, politics and exchange rate, the sector faces challenges in terms of capital, technology, human resources, supporting industries, government policies, infrastructure and environmental pollution, etc saw Toyota dominate the top-selling market with three of the top 4 positions held by Toyota vehicles. In 2017, Thailand remained the largest auto market for Vietnam with 38,244 vehicles, an 5

6 Content 1. Business environment 1.1 Macroeconomics 1.2 Legal barrier 6

7 1. Business environment 1.1 Macroeconomics Gross domestic product (GDP) in 9 months of 2017 is estimated to increase 6.41% over the same period last year, of which the first quarter increased 5.15%, the second quarter increased 6.28%, the third quarter increased 7.46%, and the fourth quarter increased 7.65%. GDP growth, Monthly CPI fluctuations, Consumer price index (CPI) in 2017 has a lot of changes. Source: VIRAC, GSO Source: VIRAC, GSO 7

8 1. Business environment 1.1. Macroeconomics GDP per capita has grown significantly over the years. USD GDP per capita, Source: VIRAC, GSO Consumer Confidence Index, Q1/2014 Q3/2017 Consumer confidence index in Vietnam increased sharply in Q2 / 2017 with 117 points (up 5 points compared with Q4 / 2016), Source: VIRAC, GSO 8

9 1. Business environment 1.1 Macroeconomics Lending rates have fallen sharply since 2015 thanks to SBV's regulatory efforts as an advantage for supporting manufacturing enterprises. Average lending interest rate, VND/USD exchange rate, Source: VIRAC, GSO Source: VIRAC, GSO 9

10 1. Business environment 1.1 Macroeconomics Level of urbanization, The increasing proportion of people living in urban areas has contributed to the expansion of the auto market. Source: VIRAC, GSO Disposable income and household expenditures, 2008 Increase in income and purchasing power: 2017f VND million Source: VIRAC, GSO 10

11 Content 1. Business environment 1.1 Macroeconomics 1.2 Legal barrier 1.3 Impact of free trade agreements 11

12 1. Business environment 1.2 Legal barrier Strengthening the quality control of motorized vehicles: Draft Law on Corporate Income Tax: Regulation of maintenance of means of transport Type of car Maintenance cycle Source: VIRAC summarized Circular53/2014/TT-BCTVT Vehicle load control: 12

13 1. Business environment 1.2 Legal barrier To change the regulations on prices for special consumption tax calculation for imported automobiles of under 24 seats. 13

14 1. Business environment 1.2 Legal barrier The draft import tax applies to automobile parts Menu of goods Commodity code details Tax rate If the current Most favored nation (MFN) import tariff is set at the WTO commitment ceiling, it will remain the same as the current tariff, but if lower, the increase will be equal to the committed ceiling. Source: VIRAC 14

15 1. Business environment 1.2 Legal barrier Modification of import tax on CB Units from a number of countries: Roadmap to apply special consumption tax on cars 1 Segment Current SCT From 1/7/ /12/2018 From 1/1/ Source: VIRAC summarized Circular165/2014/TT-BTC 15

16 1. Business environment 1.2 Legal barrier On October 9, 2017, the Ministry of Finance issued Decision No / QD-BTC supplementing the price list for registration of car and motorbike registration fees issued together with Circular No. 304/2016 / TT-BTC effective from 12/10/

17 1. Business environment 1.2 Legal barrier Decree No. 116/2017 / ND-CP of October 17, 1977 stipulating the conditions for production, assembly, import and business of warranty and maintenance services of automobiles of various types and effective from the date of signing. 17

18 1. Business environment 1.2 Legal barrier 18

19 1. Business environment 1.2 Legal barrier Conditions for car maintenance and warranty: 19

20 1. Business environment 1.2 Legal barrier 20

21 1. Business environment 1.2 Legal barrier The Ministry of Transport has issued Circular No. 03/2018 / TT-BGTVT guiding the implementation of Decree 116 on technical safety and quality control and environmental protection applicable to imported cars. 21

22 Content 2.1 World automobile market Spare parts Production Consumption Import - export Top typical countries Top typical brands 22

23 2.1 World automobile market Spare parts USD billion Import of world car components, e Country Import structure of automobile components and accessories, 2016e Ranking Proportion (%) Source: VIRAC, UN Comtrade Source: VIRAC, UN Comtrade 23

24 2.1 World automobile market Spare parts In the 1999s, except for Japan, other East Asian countries took a modest place in the auto production of the global automotive production network. Country Export structure of automobile components and accessories, 2016e Ranking Proportio n (%) Source: VIRAC, UN Comtrade 24

25 Content 2.1 World automobile market Spare parts Production Consumption Import - export Top typical countries Top typical brands 25

26 2.1 World automobile market Production Million units Production of cars in the world, In 2016, total production of the whole world automobile market showed signs of strong growth with the increase of 4.62% after many years of growth down. Structure of world production by vehicle, 2016 Source: VIRAC, OICA Source: VIRAC, OICA 26

27 2.1 World automobile market Production Production structure by region, e Source: VIRAC, OICA Today, the world's production of car automobiles is still in place in three traditional areas, with the early auto industry in North America, Western Europe and East Asia. While Western Europe with Germany's largest production - the first place to bring cars into mass production in the late 19th century, 27

28 Content 2.1 World automobile market Spare parts Production Consumption Import - export Top typical countries Top typical brands 28

29 2.1 World automobile market Consumption Million units World car consumption by type, Global car sales in 2016 were 93.9 million vehicles, up 4.7% from 2015, Source: VIRAC, OICA 29

30 2.1 World automobile market Consumption Million units Consumption of car in the world, Although the global market is growing, it is uneven across regions. Source: VIRAC, OICA 30

31 2.1 World automobile market Consumption Thousand units Car consumption of ASEAN Automotive Federation members (AAF), 2017 Source: VIRAC, OICA 31

32 2.1 World automobile market Consumption The number of vehicles used in the world, e According to 2015 statistics, America and Asia - Oceania is the largest car consumption region in the world with a share of 32.9% and 33.5%, with major contributions from the United States and China. Source: VIRAC, OICA Consumption in the US will reach million units, a record high. Since 2001, US household finances have improved steadily as the economy grew to its highest level in a decade, Structure of vehicle usage by area, 2015 Source: VIRAC, OICA 32

33 2.1 World automobile market Consumption Number of vehicles per 1,000 people in some typical countries, 2015 * Average automobile ownership 182 units/ 1,000 people Source: VIRAC, OICA 33

34 Content 2.1 World automobile market Spare parts Production Consumption Import - export Top typical countries Top typical brands 34

35 2.1 World automobile market Import - export Million units Exporting cars in the world, e Automobile exports in the world in 2016 fell the most since Source: VIRAC, UN Comtrade 35

36 2.1 World automobile market Import - export Structure of automobile exports by country, 2016e Import structure of cars by country, 2016e Source: VIRAC, UN Comtrade Source: VIRAC, UN Comtrade Top largest exporters of automobiles are Germany, Japan, USA, Mexico, South Korea... 36

37 Content 2.1 World automobile market Spare parts Production Consumption Import - export Top typical countries 37

38 2.1 World automobile market Top typical countries China - The world's largest car consumption market Top the largest automobile consumption countries by volume, 2016 Place Country US - The market continued to grow for 6 years Source: VIRAC, OICA 38

39 2.1 World automobile market Top typical countries Japan - Three consecutive years of decline Germany - Europe's largest automobile market and considered the birthplace of the automobile industry India - Emerging markets have the biggest growth in the world by 2016 (8.4%) UK Brazil Declining domestic consumption as the government stopped adopting the stimulus policy through tax cuts on domestically produced domestic products, including cars and reduced exports in Argentina's largest export market due to the economic crisis. 39

40 2.1 World automobile market Top typical countries France Canada Strong growth thanks to exports benefited from increased demand in the US South Korea - The supercar boom is considered indispensable for a formal country like South Korea 40

41 Content 2.2 Vietnam automobile market Scale and characteristics Industry value chain Industry position Production Consumption Import Automobile prices 41

42 2.2 Vietnam automobile market Scale and characteristics Market segments 42

43 2.2 Vietnam automobile market Scale and characteristics Number of businesses, Number of employees, Source: VIRAC, GSO Source: VIRAC, GSO The number of enterprises operating in automobile assembly and assembling sector in 2016 is 65 enterprises, increasing 22.64% in comparison with

44 2.2 Vietnam automobile market Scale and characteristics VND billion Turnover of automobile manufacturing and assembly, VND billion Turnover of automobile wholesaling and retailing, Source: VIRAC, GSO Source: VIRAC, GSO With the increasing disposable income of the people, the rising middle class has led to a growing demand for cars and used cars. 44

45 2.2 Vietnam automobile market Scale and characteristics Vehicle consumption structure by business, Q1/2018 In the first three months of 2018, Truong Hai continues to be the largest holding company, but has dropped to only 42.7% of total car consumption in the country. Source: VIRAC, VAMA 45

46 2.2 Vietnam automobile market Scale and characteristics The form of car assembly by the degree of complexity increases: 46

47 Content 2.2 Vietnam automobile market Scale and characteristics Industry value chain Industry position Production Consumption Import Automobile prices 47

48 2.1 Vietnam automobile market Industry value chain Vietnam automobile industry value chain Source: VIRAC, OICA, VAMA 48

49 Content 2.2 Vietnam automobile market Scale and characteristics Industry value chain Industry position Production Consumption Import Automobile prices 49

50 2.2 Vietnam automobile market Industry position Industry position of Vietnamese cars compared with the world in 2016 Source: VIRAC, OICA, GSO 50

51 Content 2.2 Vietnam automobile market Scale and characteristics Industry value chain Industry position Production Consumption Import Automobile prices 51

52 2.2 Vietnam automobile market Production In the first three month of 2018, assembly production reached thousand vehicles, up 7.81% over the same period in Production and assembly of automobiles in Vietnam, Thousand units Production output of THACO, Source: VIRAC, GSO, VAMA Thousand units Source: VIRAC, THACO 52

53 2.2 Vietnam automobile market Production Production, assembly structure by vehicle type, 2010 Q1/2018 Thousand units In the car assembly structure in Vietnam, passenger cars always maintain a high proportion of 60-70%. Traffic panorama of Vietnam, 2016 Source: VIRAC, GSO Source: VIRAC, Ford 53

54 2.2 Vietnam automobile market Production Expenses for research and development investment At present, Vietnam's automobile industry has almost no investment in research and development (R&D). Value chain assembly and production of Truong Hai Auto Supplier Relevant units R&D Centre Factory Source: VIRAC, THACO 54

55 Content 2.2 Vietnam automobile market Scale and characteristics Industry value chain Industry position Production Consumption Import Automobile prices 55

56 2.2 Vietnam automobile market Consumption General automobile consumption in Vietnam, Source: VIRAC, VAMA In 2017, Vietnam car consumption was estimated at 272,250 thousand units, down 10.3% from the same period last year. 56

57 2.2 Vietnam automobile market Consumption The trend of car development in Vietnam is against the other countries in the region. Trends in automobile industry development in some Southeast Asian countries, Source: VIRAC, OICA, VAMA 57

58 2.2 Vietnam automobile market Consumption According to statistics from OICA and VAMA, car ownership per 1,000 people in Vietnam in 2016 (31 cars) is still low compared to other countries in the region as well as in the world. unit Number of cars owned per 1,000 people, 2016e Source: VIRAC, OICA, VAMA unit Number of cars per 100 households by urban and rural areas, e Source: VIRAC, GSO 58

59 2.2 Vietnam automobile market Consumption Thousand units Consumption of cars by vehicle type, 1/ /2017 Source: VIRAC, VAMA The overall car market consumption in September continued to decline as the car market remained bleak and did not show any resurgence of growth despite the decline in car sales in many segments. 59

60 2.2 Vietnam automobile market Consumption Thousand units Consumption output by car origin, 1/ /2017 In 2017, Vietnam consumed up to 272,750 car units, down 10% compared to Source: VIRAC, VAMA 60

61 2.2 Vietnam automobile market Consumption In 2017, Toyota Vios continues to be the best-selling car on the market. Top 10 best selling cars 2017 Thousand units Toyota Vios Toyota Fortuner Ford Ranger Toyota Innova Mazda 3 Kia Morning Mazda CX-5 Honda City Kia Cerato Ford EcoSport Source: VIRAC, VAMA 61

62 2.2 Vietnam automobile market Consumption Consumption structure of VAMA members by region, Consumption vehicles of VAMA members by region, 2017 Thousand units Thousand units Source: VIRAC, VAMA Source: VIRAC, VAMA 62

63 2.2 Vietnam automobile market Consumption Vehicle consumption structure by business, 2016 Vehicle consumption structure by business, 2017 Source: VIRAC, VAMA Source: VIRAC, VAMA High concentration market share: In 2016 and the first nine months of 2017, more than 71% of VAMA's vehicle consumption market share is held by Truong Hai, Toyota, and Ford. 63

64 2.2 Vietnam automobile market Consumption Competitive Analysis between Truong Hai and Toyota Vietnam by the end of September 2017 Truong Hai Toyota Distribution scale Sales in 9M/2017 Brands Marketing strategy Promotion Human resource training Product advantage Strength Weakness Direct competitive products Source: VIRAC 64

65 Content 2.2 Vietnam automobile market Scale and characteristics Industry value chain Industry position Production Consumption Import Automobile prices 65

66 2.2 Vietnam automobile market Import Thousand units Import of automobiles in complete units, Source: VIRAC, GDVC Total imported cars in 2017 reached 97,213 thousand, worth $2.2 billion, 66

67 2.2 Vietnam automobile market Import Importing cars by country, Thousand units In 2017, Thailand remained the largest auto market for Vietnam with 38,244 vehicles, with an average price of 395 million VND/Unit. Source: VIRAC, GDVC 67

68 Content 2.2 Vietnam automobile market Scale and characteristics Industry value chain Industry position Production Consumption Import Automobile prices 68

69 2.2 Vietnam automobile market Automobile prices USD thousand Automobile prices comparing Vietnam with other countries, 6/2017 The price of cars in Vietnam is 1.2 to 1.8 times higher than that of other countries in the region and in the world, depending on the category. Country Import tax on cars by country (%), 12/2016 < 2,000 cc 2,000-3,000 cc > 3,000 cc seats Source: VIRAC 16 seats Pick-up Source: VIRAC, MOIT 69

70 2.2 Vietnam automobile market Automobile prices Price of vehicle according to the cost structure of the consumer must bear Source: VIRAC List of taxes applicable on a car in Vietnam: Fees to be paid when wheeled on the road: 70

71 2.2 Vietnam automobile market Automobile prices VND million Price movements of some major vehicles, 6/ /2017 It can be seen that as of December, 2017, prices of cars in Vietnam are tending to decrease compared to the end of September. Source: VIRAC 71

72 2.2 Vietnam automobile market Automobile prices Imported car prices from ASEAN before 1/1/2018, assuming an original price of 100 Car type (Capacity) Former tariff, prior to 1/1/2018 Corporate Original price Import tariff SC tariff VAT income tax Local price Source: VIRAC Imported car prices from ASEAN after 1/1/2018, assuming an original price of 100 Car type (Capacity) Original price Former tariff, prior to 1/1/2018 Import tariff SC tariff VAT Corporate income tax Local price Deduction level Source: VIRAC 72

73 Content 3. Risks and Challenges 73

74 3. Risks and Challenges Risk factors Policy risk Political risk Exchange rate risk VND/CNY exchange rate, 1/ /2017 Source: VIRAC, Yahoo Finance 74

75 3. Risks and Challenges The car manufacturing and assembly industry faces many challenges Low localization rate Direct competitors Potential opponents 75

76 3. Risks and Challenges Capital and technology Not high human resources Business information system 76

77 3. Risks and Challenges Government policies Traffic confrastructure Oil price action World crude oil, US Dollars/barrel Source: VIRAC, World Bank 77

78 3. Risks and Challenges Impact on environmental pollution Structure by source of CO emission to the environment Source: VIRAC, World Resources Institute 78

79 4. Driving forces The challenge coming from integration Market dominance of imported cars The transfer of the production and assembly of cars to Thailand 79

80 Content 4. Driving forces 80

81 4. Driving forces Prospect of automobile consumption in Vietnam Demand for automobile consumption in Vietnam continues to grow relatively when compared with other markets in the region. Roadmap for tax reduction: Infrastructure - traffic is improving: Economic development 81

82 4. Driving forces Size and quality of population Population pyramid, 2016 Low interest rates, stability and growth in consumer lending are driving forces for auto industry growth. VND trillion Outstanding consumer loans, Source: VIRAC, GSO Source: VIRAC, NFSC 82

83 Content 5. Planning 83

84 5. Planning Decision No / QD-TTg approving the master plan for development of Vietnam's automobile industry to 2020 with a vision to Expected volume of domestic assembled vehicles compared to total domestic demand (%) Năm 2030 Source: VIRAC, Decision No.: 1211/QĐ-TTg Estimated vehicle output and growth rate of the year Expected to export complete vehicles and spare parts Production output of domestic vehicles (pcs) Growth rate (%/year) Target Unit to Source: VIRAC, Decision No.: 1211/QĐ-TTg Source: VIRAC, Decision No.: 1211/QĐ-TTg 84

85 5. Planning Rate of localization by value over years Supporting industry objectives: Oriented development Source: VIRAC, Decision No.: 1211/QĐ-TTg 85

86 5. Planning 86

87 Content 6. Enterprise 87

88 6. Enterprise Overview of Truong Hai Auto Some typical models of Truong Hai Auto Vina mazda Kia motors Peugeuot Mazda 3 Kia morning Peugeot 208 Mazda 6 Kia Cerato Peugeot 408 Content is intentionally removed for demo Peugeot purpose Mazda Cx5 Kia Sorento 3008 THACO - Truck THACO - Bus Truck Couch 88

89 6. Enterprise Business strategy of Truong Hai Auto Sales and share of Truong Hai Auto, M/2017 Currently, business strategy of Truong Hai is applied separately for different product lines: Unit Source: VIRAC Some financial indicators of Truong Hai Auto Indicator (VND billion) Evaluating Truong Hai Auto From 2013 to 2016, THACO set a record when sales and share consecutively increased, Source: VIRAC 97

90 6. Enterprise Overview of Toyota and its subsidiary in Vietnam Typical models Camry Corolla Fortuner Innova Vios Hiace In the first nine months of 2017, TMV sold 43,832 vehicles; market share remained at 23.7%. Sales (volume) and market share of Toyota Vietnam M/2017 The strategy of Toyota Vietnam Unit Source: VIRAC * Doanh số không bao gồm dòng xe Lexus 98

91 6. Enterprise Overview of Lexus and its subsidiaries in Vietnam Lexus is the exclusive luxury car brand of Toyota Motor Corporation was born in Typical models Lexus LS 460L Lexus LX 570 Lexus GS 350 Lexus GX 460 Lexus ES 350 Lexus RX 350 Unit Sales (output) of Lexus Vietnam2014 9M/2017 Strategy of Lexus Vietnam In the Vietnamese market, some Lexus vehicles have not yet achieved sales as expected, Source: VIRAC 101

92 6. Enterprise Overview of Ford and its subsidiary in Vietnam Typical models Ecosport Transit Fiesta Ranger Sales and share of Ford in the first nine months of 2017 continued to stabilize at 11.6%, ranking third in the association VAMA. Unit Sales (volume) and market share of Ford Vietnam M/2017 Competitive strategy Ford Vietnam s strategy Investment strategy on people Source: VIRAC 99

93 6. Enterprise Overview of Honda and its subsidiary in Vietnam Typical models City CR-V Civic Accord In the first nine months of 2017, Honda sold 9,756 units, representing 5.3% of the total market share. Unit Sales (volume) and market share of Honda Vietnam2013 9M/2017 Honda Vietnam's strategy One of the business strategies of Honda Motor Vietnam is to provide products with advanced engine technology, durability and fuel economy, Source: VIRAC 100

94 6. Enterprise Overview of Mercedes-Benz and its subsidiary in Vietnam Typical models C Class A Class E Class GLE/GLS In the first nine months of 2017, sales of Mercedes-Benz Vietnam increased impressively (21% compared with the same period in 2016, reaching 4,940 vehicles) S Class V - Class Sales (volume) of Mercedes - Benz Vietnam2013 9M/2017 Strategy of Mercedes - Benz Vietnam Unit Mercedes-Benz Vietnam strives to take care of its customers. Source: VIRAC 102

95 6. Enterprise Overview of Hino Motors and its subsidiary in Vietnam Typical models Light truck Medium truck For the first nine months of 2017, Hino sales reached 2,786 units, down 1% from the same period of 2016 and the market share was only 1.5% Heavy truck Sales (volume) and market share of Hino Motor Vietnam M/2017 Unit Competing by quality: The strategy of Hino Motors Vietnam Marketing strategy: Growth prospects: Source: VIRAC 103

96 6. Enterprise Overview of Isuzu and its subsidiary in Vietnam Typical models N-series F-series Q-series Đầu kéo In the first nine months of 2017, Isuzu showed a comeback with 5,126 units, up 5% from the same period of 2016, with a market share of 2.8%. Sales (volume) and market share of Isuzu Vietnam M/2017 Isuzu Vietnam s strategy Unit Isuzu's brand strategy and customer acquisition service: Source: VIRAC 104

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