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The Automotive Market Of Vietnam And The Philippines

The Automotive Market of Vietnam and The Philippines

With a relentless implementation of new technologies combined with a surge in investment deals, it is not erroneous to say that the automotive industry in Southeast Asia is experiencing a positive transition. Before the proposed introduction of Vietnam’s VinFast, Malaysia was the only Southeast Asian nation that had its own national car, in the form of Proton. Having said this, the automotive market of not only Vietnam, but the Philippines has seen tremendous growth and should be lauded by the ASEAN community.

Automotive sector in the Philippines

According to a forecast by Frost & Sullivan, the number of new car sales in the Philippines (both commercial and passenger cars) will grow 11.5% to 576,959 units this year.

Over the next five years, the Philippine economy is expected to grow by 6-7% due to consumer expenditure and investment, with new car sales supported by strong economic improvement. The manufacturing industry in the country has expanded by over 7% since 2010. Participating in the automotive industry revitalisation initiative (Comprehensive Automotive Resurgence Strategy or CARS program), Toyota Motor Corporation and Mitsubishi Motors’ overseas subsidiaries will have a positive impact on local production capacity.

This automotive progress is facilitated by a pledge made by the Philippine government that will oversee a US$160 billion infrastructure upgrade in Manila. This initiative encompasses the building of roads that are of higher quality than before. President Rodrigo Duterte has also upped the ante by planning the construction of more highways that could offset traffic congestion in the capital. Such a move might potentially lead to an increase in car owners. It is also worth noting that 61 of the 75 important projects of the national infrastructure development plan or ‘Build Build Build’ relates to the automotive/transportation sector.

Automotive progress in Vietnam

With the car ownership rate in Vietnam at about 20 units per 1,000 people, the domestic automotive market has tremendous potential for further growth, with consumption-oriented, middle-income households being a catalyst for this shift. A report by Frost & Sullivan has highlighted that new car sales volume in 2018 is expected to grow to 256,000 units, up 6.8% from last year.

Furthermore, a steady elimination of tariffs for passenger cars through free trade agreements (FTA) will create positive ripples across the automotive pond, this year. Not only that, demand for commercial vehicles is expected to increase due to infrastructure development projects that are focused on road traffic.

According to Reuters, a point that could strengthen Vietnam’s current automotive success is the building of a car factory by Vingroup, the country’s leading property dealer in a project worth US$1-1.5 billion in the first phase. VinFast, Vingroup’s construction brand, is responsible for signing a Memorandum of Understanding (MoU) with Credit Suisse for the bank to extend US$800 million in financing the project.

However, there are potential challenges that might come to the fore, which could possibly hinder new car sales growth in Vietnam. The issuance of Decree 116, which was introduced in October of last year, has tightened controls for imported automobiles in terms of origin, types, technical safety, and environment protection requirements. As a consequence, automobile juggernauts like Toyota and Honda have announced a halt to exporting cars to Vietnam because they are unable to obtain a Vehicle Type Approval (VTA) certification issued by authorities in the exporting country.

This divisive clause may spell an end to small-scale auto importers in the country, as there will be minimal probability that international car manufacturers are agreeable to allowing an unofficial dealer to recall any of their products.

The expanding automotive sectors of both, the Philippines and Vietnam should be commended. The potential release of VinFast in Vietnam and Duterte’s proposed infrastructure plans in the Philippines could spur success for the automotive sectors of these two countries. The competition among automotive players in the region could possibly be the catalyst that propels ASEAN’s automotive industry to greater heights in the coming years.

Bystronic Strong In Vietnam

Bystronic Strong in Vietnam

Ho Chi Minh City, Vietnam: Sheet metal processing companies in Southeast Asia are growing with Bystronic technology. In response, the company is expanding its local infrastructure in Vietnam for all aspects relating to consulting, sales, and customer services for latest technologies in the fields of laser cutting, bending, and automation.

The sheet metal processing industry in Southeast Asia is developing rapidly. Here too, an increasing number of users are relying on technologies such as the fibre laser, automation, and suitable bending solutions.

In order to provide its customers with even better support for their manufacturing processes, the company is strengthening its sales and service structures in the Southeast Asia market region. Recently, it enhanced its local presence here with the opening of an additional subsidiary in Vietnam.

Bystronic Vietnam held the official opening ceremony for the new subsidiary in Ho Chi Minh City in April 2018. In addition to sales and service areas, the new subsidiary is complemented with a demonstration centre, where it provides its customers with advice during live demonstrations in the fields of laser cutting, bending, and software.

Thus, the company now offers its customers in Vietnam two local points of contact for the consulting, sales, and service relating to the latest metal processing technologies at its business locations in Ho Chi Minh City and Hanoi.

Mitsubishi Inks Electric Vehicle Deal With Vietnam

Mitsubishi Inks Electric Vehicle Deal With Vietnam

Hanoi, Vietnam: Japanese Automaker Mitsubishi Motors Corporation has signed a memorandum of understanding (MoU) with the government of Vietnam to research and develop electric vehicle (EVs) in the country.

The Japanese automaker Mitsubishi Motors Corporation will work with the Vietnam Industry Agency under the Ministry of Industry and Trade to conduct a joint study of efficient Electric Vehicle usage as well as the public policy programs and incentives that could support the accelerated adoption of sustainable automotive technology.

“We are delighted to conclude the MOU with Mitsubishi Motors as our important partner. This joint study is a very important milestone to promote the transition of a low carbon economy,” said Tran Tuan Anh, Vietnam’s Minister of Industry and Trade.

Vietnam is seeking ways to reduce carbon dioxide emissions and to produce cleaner air and greener cities. The Japanese automaker is considering another joint Electric Vehicle study in other cities in Vietnam as a testbed for environmentally conscious policies.

“We look forward to sharing (our) expertise in electric vehicles and exploring how government policy can support the adoption of this transformative technology,” said Kozo Shiraji, executive vice president, Mitsubishi Motors.

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Vietnam PMI Rises To 52.5

Vietnam: The Nikkei Manufacturing PMI in Vietnam rose to 52.5 in December of 2017, compared to 51.4 for  the previous month. Reported by Market Economics, it was the highest reading since September 2017, as new orders expanded the most in three months, employment grew the most since September and buying activity rose at the fastest pace since April.

Additionally, business confidence strengthened to a nine-month high, new export orders rose faster and new orders continued to rise. Meanwhile, rates of inflation of both input costs and output prices were broadly in line with those recorded in November.

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