transport & Infrastructure

Car imports from Europe to Vietnam mostly came from France and Germany in the first half of this year and were worth a little shy of US$10 million collectively. Of note, import taxes on cars and motorcycles before the EVFTA came into force were between 32 percent and 70 percent. These will be progressively reduced to zero over the first seven to ten years of the agreement…

Of note, Vinfast was given a number of tax breaks and incentives by the North Carolina government to encourage its investment in the state. These amounted to a combined US$1.25 billion understanding that the firm would create 7,500 jobs and invest US$4 billion in its factory. This included US$325 million in funds provided up front for site preparation and the upgrade of infrastructure to service the plant, as well as training programs, with the rest tied to key milestones in construction and hiring. It’s not clear what will happen to these incentives in the context of the three year delay that has just been announced…

Of note, FGF will sit beside Vuong’s electric car ride hailing firm Xanh GSM. Xanh GSM has accounted for the lion’s share of electric car purchases from VinFast. However, many of these, it was reported in April, were languishing in a field north of Hanoi with the supply far outstripping demand. With this in mind, FGF could have a major client right off the bat…

For some context, registration fees can vary between provinces, however, the highest it can be, per Circular 229, is VND 20 million or about US$786. With a 50 percent discount that’s VND 10 million or about US$393. With a new car running at around VND 300 million to VND 500 million this reduction in registration fees is a drop in the bucket. In this context, one reading of this might be that correlation does not necessarily mean causation. It could also be, however, that the love for a good discount in Vietnam is not always entirely rational…

Notably, Vietnam’s EV charging network is mostly owned by VinFast, a subsidiary of Vietnamese conglomerate Vingroup. The firm has already developed more than 150,000 EV charging ports nationwide but currently restricts access exclusively to its own EV users. The participation of Charge+ in expanding the charging network for other electric vehicle brands in Vietnam could help reduce difficulties for Chinese EV producers entering the Vietnamese market…

Of note, Vietnam’s EV charging network is mostly owned by VinFast, a subsidiary of Vietnamese conglomerate Vingroup. The company claims to have more than 150,000 EV charging ports nationwide, however, these facilities are currently exclusively for Vinfast’s EV users. Vinfast has said that, after 10 years, the network will be opened up to other brands, however, this is years away and it’s not clear what electric car buyers of other brands will do until then…

Vietnam’s electric vehicle market holds promise for foreign car manufacturers. Of note, electric car buyers are eligible for incentives such as exemption from registration fees for the first three years and a 50 percent fee reduction for the subsequent two years, per Decree 10/2022/NĐ-CP.  Nevertheless, foreign car manufacturing firms may encounter challenges related to EV charging infrastructure and electricity supply shortages in Vietnam. These hurdles could potentially hamper manufacturers in expanding their market presence and sales…

Special Consumption Tax is paid by the consumer at the point of purchase of the vehicle to the dealership who then holds on to those funds to pass on to the Tax Department when they fall due. By delaying these payments, this policy acts like a short term loan to these operations. This has been a popular means of supporting local enterprises over the past few years as the car market has struggled through a broader economic downturn…

This is in the context of antidumping tariffs on electric vehicles in the US and EU which may see China look for alternative markets for their vehicles. With a reasonably big population and rapidly rising incomes, not to mention being just a stone’s throw away, Vietnam is a prime choice…

Of note, an article in Business Forum Magazine has lamented that the bulk of this decline was in locally produced vehicles and suggests this might presage an even greater decline of the local car manufacturing industry. It points out that import tariffs have come down considerably on motor vehicles under the ASEAN Trade in Goods Agreement but are also declining as a result of the European-Vietnam Free Trade Agreement which should see tariffs on cars imported from Europe reduced to zero by 2030.

Vietnam’s automotive industry is huge but dominated by motorcycles. That said, cars are becoming more popular with just shy of 5 million registered vehicles at the end of 2020. This does, however, represent just 5 percent of the population of 100 million people which means there is plenty of room for car sales to grow…