The automobile market survived Covid-19, the Government agreed to reduce the registration fee by 50%, and the appearance of new items, including electric cars. These were the landmarks of the Vietnamese auto market in 2021.
The outbreak of Covid-19 in 2021 with a long lockdown in many provinces in Vietnam affected the entire economy, including the auto industry.
According to the Vietnam Automobile Manufacturers Association (VAMA), many of its member factories had to suspend operation for a period of time. Some of them have resumed normal operations, but their inventory of cars is huge because auto dealers did not operate for a long time. Many companies recorded sales declines of over 60%.
Vietnam’s auto market was very gloomy in the first half of 2021 and lasted until the late months of the year. The market started growth momentum when activities gradually resumed, and after introduction of positive policy information and new car series, as well as demand stimulus policies from auto manufacturers and traders.
New electric vehicle models
The Vietnamese auto market is not an exception to the electrification trend. Electric vehicles in Vietnam are currently only at the starting line. According the Vietnam Registry, the number of electric vehicles registered in Vietnam was slightly more than 1,000 units by the end of 2020. Of the number, battery-powered vehicles accounted for about 1%, and the rest were hybrid vehicles (HEV and PHEV).
In 2019 and 2020, Audi and Porsche began introducing electric vehicles and building charging stations for domestic customers. In 2020, Toyota launched the Corolla Cross Hybrid version, exploring the popular car segment. In 2021, the company continues to introduce the Camry Hybrid version to the Vietnamese market.
In 2021, Vietnamese car manufacturer VinFast introduced the pure electric model VF e34. This is the first popular electric vehicle model in Vietnam, which is locally manufactured. The first electric cars are delivered to customers in late 2021. This firm has also built a system of charging stations in provinces and cities across the country and completed an ecosystem for electric vehicles.
Thaco introduced the pure-electric Kia EV6 model and revealed its plan to distribute this model next year. Mercedes – Benz Vietnam also revealed that it will sell two electric cars EQB and EQS in the domestic market. Volkswagen plans to sell its electric models in Vietnam.
Policies on for electric vehicles
To attract electric vehicle production as well as promote consumption of this type of vehicle, Vietnam is developing policies on electric cars.
According to the Ministry of Finance, the starting point for Vietnam and other ASEAN countries is almost the same. The opportunity to attract investment in the production and assembly of electric cars in Vietnam has a lot of potential if the country issues preferential policies early to support the development of the industry.
According to the ministry’s proposal, electric car manufacturers in Vietnam will enjoy incentives to assemble electric vehicles in Vietnam. Users will also benefit as the first-time registration fee for battery electric cars (BEVs) will be equal to 50% of the first registration fee for cars fueled by petrol and diesel with the same number of seats.
Some argue that Vietnam needs to develop a specific roadmap for the development of electric vehicles in Vietnam, and at the same time expand incentives to other hybrid electric vehicles (HEVs), plug-in hybrid vehicles (PHEV) and full cell electric vehicles (FCEV) to further expand the market for electric vehicles.
50% discount on registration fee for locally assembled cars
On November 26, the Government issued Decree 103 stipulating the registration fee for domestically manufactured and assembled cars. Accordingly, from December 1, domestically manufactured cars will be entitled to a 50% reduction in registration fees compared to the current rate. This policy lasts until May 2022.
This is the second time in the past two years that the registration fee for domestically manufactured and assembled cars has been halved. According to experts, the policy does not reduce the price of the car, but helps the price to roll down and stimulate consumer demand and encourage people to shop.
The reduced rate for domestically assembled cars has had a positive impact on the Vietnamese automobile market. According to VAMA, in the second half of 2020, the output of domestically manufactured and assembled cars increased steadily over the months. In November and December 2020, the number of domestically manufactured and assembled cars sold rose by 14.7% and 25% respectively compared to the previous month. Many people expect this will be a strong stimulus for domestically assembled cars to boom at the end of the year.
New models launched
Although the auto market was gloomy this year, car manufacturers continuously refreshed their product series to attract local customers. This is one of the factors contributing to the excitement of the market in the last months of the year. Some new versions are offered in Vietnam with new names, such as Nissan Almera (Nissan Sunny), Kia K5 (Kia Optima), Kia K3 (Kia Cerato).
Notably, new models have appeared for the first time in the urban SUV segment such as Kia Sonet and Toyota Raize. Another new face in the popular electric vehicle segment, VinFast VF e34, also reached Vietnamese customers this year.
Vietnamese car brand launched in the US
VinFast has reaped success as the brand has gradually established itself in the domestic market. The Vietnamese automaker continues to make a mark when reaching out to the world market with two electric car models launched in the US, the VF e35 and VF e36, at a major auto show in the US.
The Vietnamese car company set up its US headquarters in Playa Vista, known as the “Silicon Beach” of Los Angeles. Along with the establishment of the head office, VinFast My will open branch offices, customer care call centers in many areas and a network of showrooms and service workshops to introduce its brand and electric vehicles to the US market.
The electric-car race is only just beginning in Vietnam and VinFast have taken an early lead. Late last week they officially handed over the first batch of VFe34 electric automobiles to clients, the first electric cars to hit the road in Vietnam.
The Ministry of Finance (MoF) has proposed rescheduling excise tax payments for local automobile manufactures and assemblers.