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The Vietnam News

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Low-cost cars flocking to Vietnam

More and more Kia Morning and Hyundai Gets are rolling on Hanoi streets. These models are favoured by Hanoians as their prices are very ‘soft’, at $15-17,000/unit. Analysts are now talking about a new wave of low-cost car imports coming to Vietnam as these models prove suitable to the pocketbooks of many Hanoians, especially since the fixed import tax rate on small cylinder used cars was lowered by 10-20% in February 2007.

Nguyen Minh Thanh, Director of an automobile trading company, said that car traders would focus on importing small cars, especially ones that have the cylinder capacities of 1.0L or 1.5L. According to Mr Thanh, these cars have the post tax value of $10,000 or a little higher, affordable for many people. He said that small cars would flood the market in the time to come.

Unlike Hanoians, Saigonese seem to dislike low-cost cars. The sales agent for Lifan cars on Kinh Duong Vuong street in HCM City said that there were few buyers for the Lifan 520 1.6L, which is selling at $15,000. A car salon owner on Dien Bien Phu street said that the tastes of Hanoians and Saigonese were quite different. For the same amount of money, Saigonese will buy an old car manufactured by Toyota, Honda or Nissan instead of a brand new low-cost car made in China. Car dealers said that imports of Chinese low-cost cars would repeat what happened in the past with low-cost Chinese motorbikes. The motorbikes flooded the market in the first period and after that they were refused by customers. In the immediate time, experts say, the appearance of low-cost China-made cars will help reduce the average car price on the market.

However, experts have warned that the price reduction has its price. Traffic jams, a polluted environment, hard management over low-cost cars will be the biggest problems to arise if low-cost cars flood the market. In April 2006, China’s leading automobile manufacturer set up a joint venture with TMT Company under the Vietnam Automobile Industry Corporation to assemble cars with the Tidy trademark. Many other domestic automobile assemblers are also targeting the low-cost car market. An enterprise which once made fat profit bringing Chinese assembly lines to Vietnam has shifted to assemble Chinese cars which have the selling price of $10,000/unit.

When asked about the quality of China-made cars, experts from the Automobile Engineers’ Association said that there was a big gap in the quality of different models. The quality of China-made cars selling in the US and Europe is quite different from that of cars selling in Vietnam. Experts have called on State management authorities to set up technical barriers to control the quality of low-cost cars, thus limiting the number of cars rolling on the streets.

Tien Phong - May 18, 2007.