Low-cost Vietnamese-made cars hit the market

When VinFast, a Vietnamnese automobile manufacturer, announced the plan to make Premium (Pre), or a low-cost product line, many Vietnamese hoped they would be able to buy cars at reasonable prices in the near future.


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The Vietnamese automobile manufacturer now has plans to launch Pre models by 2020 at selling prices 20-30 percent lower than other models of the same segment available in the market.

Other manufacturers, including Truong Hai and Hyundai Thanh Cong, said that after their large investment projects are completed and production complexes become operational, they will be able to reduce car prices.

Le Ngoc Duc, CEO of Hyundai Thanh Cong, said that when its new automobile factory opens, slated for 2019, with the capacity of 120,000 products a year, some models will be priced under VND400 million.

The Vietnamese automobile market has potential with high demand. However, the car prices in the country are the highest in the world. 

An analyst said that manufacturers and car dealers set prices based on levels which will be accepted in the market, not on production costs.

Car dealers sell an imported car at VND1 billion if they believe VND1 billion will be accepted by customers. Meanwhile, the selling price of VND800 million will be high enough to cover the import costs and bring profits.

Car dealers sell an imported car at VND1 billion if they believe VND1 billion will be accepted by customers. Meanwhile, the selling price of VND800 million will be high enough to cover the import costs and bring profits.

In addition, automobile manufacturers tend to overvalue sets of car parts and brands, thus pushing up the selling prices.

The analyst also said that the car prices are unreasonably high and unpredictable. Automobile manufacturers just add new features to their products to set prices at sky high levels. When the supply is short, buyers have to pay VND100 million more to get deliveries quickly.

Bui Ngoc Huyen, general director of Xuan Kien Auto, said only when Vietnamese master automobile technology and their products become competitive will local consumers be able to buy cars at reasonable prices.

Huyen said the localization ratio increase would help reduce production costs by 15-20 percent at minimum.

Truong Hai Automobile is joining forces with Vietnamese and foreign partners to make car parts. It plans to have locally made content rate of 40 percent by 2020.

VinFast is more ambitious, planning to have localization ratio of 60 percent by 2020, including engines.

The government is considering tax policies which would encourage car part production domestically. The Ministry of Finance (MOF) has proposed a luxury tax exemption on car parts made domestically.


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Tran Thuy

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