Fri. May 27th, 2022

VietNamNet Bridge – A lot of drastic measures, administrative, economic,
technical, would be taken to gradually reduce the number of motorbikes in
circulation throughout the country.


Vietnam, motorbike market, manufacturers, tax, business strategy

The master plan on the road transport development by 2020 clearly stipulates
that by 2020, motorbikes would be used mostly in rural areas and the areas with
no public means of transport. It is expected that by that time, Vietnam would
have some 36 million motorbikes.

The number of cars to be in circulation would be 3.2-3.5 million by 2020.

A report by the Ministry of Transport showed that by the end of July 2012,
Vietnam had had 37,191,126 registered motor vehicles, including 35,240,162
motorbikes. This means that the 36 million motorbike threshold has been nearly
reached, and that Vietnam would begin applying drastic measures to slow down the
increase in the number of motorbikes to be put into circulation.

This has raised a big worry to car and motorbike manufacturers.

The motorbike’s age is over?

A senior official of the Ministry of Transport said the ministry is considering
the measures to restrict the number of motorbikes in urban areas. For example,
it may set up quotas on new motorbike registrations for every locality, or
increase taxes and fees.

An analyst has found out that if Vietnam restricts the number of new motorbikes
put into circulation at below 3 million a year, the motorbike industry would go
down by 2020 due to the output decrease.

Meanwhile, motorbike manufacturers have kicked off their plans to increase the
production capacity after realizing that the demand is still very high.

In 2012, despite the economic downturn, 3.11 million motorbikes were still sold.
Analysts have predicted that the market continues growing with 4.5 million
products to be sold by 2018-2020 instead of 3 million currently.

Motorbike manufacturers have said they have been shocked by the news that the
government would set a restriction on the number of motorbikes to be in

They complained that they have not been warned about the restriction, and that
Vietnamese policies are unstable, while sudden changes always make them suffer.

Automobile manufacturers quit the market?

There is no restriction announced for the number of cars in Vietnam. However,
the automobile industry development strategy says Vietnam would have 3.2-3.5
million cars by 2020. Meanwhile, Vietnam now has 2 million cars already. This
means that only 200,000 cars would be consumed a year in the next years, a very
small amount which experts say cannot help develop the automobile industry.

Laurent Charpentier, General Director of Ford Vietnam, said if the policy set up
two years ago, when he arrived in Vietnam to take the office, was maintained,
the Vietnamese market would have the capacity of 450,000 cars. However, as the
policy has changed, the amount of cars to be consumed would be less than
300,000. This means very few opportunities for automobile manufacturers.
The import tariff on complete built unit (CBU) cars imported from ASEAN, in
accordance with AFTA, would reduce to 50 percent by 2014 and reduce further to
zero percent by 2018. The tariff reduction would pave the way for imports to
flood the domestic market, which means no more opportunity for domestic
manufacturers to sell their products.

This may happen that automobile manufacturers would leave Vietnam or they would
stop manufacturing, but would import cars to sell on the domestic market, which
is believed to be a big market with the average income per capita at $3,000 per
annum by 2020.

Tran Thuy

By vivian