Toyota to Ford Brace for Vietnam auto import competition
After almost two decades of waiting for Vietnamese consumers to become rich enough to afford cars, manufacturers including Toyota Motor Corp. and Ford Motor Co. will have to contend with cheaper imports.
Current Vietnamese duties of 60 percent will be eliminated by 2018 for cars imported from within the Association of Southeast Asian Nations, Met Arias, chairman of the Vietnam Automobile Manufacturers Association and managing director of Ford’s unit in the country, said in an interview October 23. Without a major parts industry, car production costs are higher than elsewhere in the region because of taxes on imported components, he said.
The government cited the auto industry as an important driving force under a plan to become a “modern industrial country” by 2020. The impending abolishment of protective duties risks giving automakers little incentive to modernize or continue running plants in Vietnam even as the country’s ascent to middle-income status means more people can now afford cars.
“I was one of the early believers in Vietnam’s auto industry,” said Keith Schulz, general director of lubricant maker Vilube Corp. in Ho Chi Minh City, who was a consultant to automakers setting up plants in the nation in the mid-1990s. “But by 2018, it sounds like this industry will be cracked open like a clam, and real economics will take over.”
The country’s auto industry is in danger of collapsing with the planned elimination of industry import taxes, Vietnam News reported in August. The nation needs immediate measures to avoid becoming a major importer of cars, it said, citing Ngo Van Tru, deputy head of the Ministry of Industry and Trade’s heavy industry department.
