Vietnam strives to restrict motorbikes by 2020

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 circulation.

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

Vietnam, motorbike market, manufacturers, tax, business strategy