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The Vietnam Automobile Industry at a Crossroads 

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The Vietnam automobile industry has developed gradually since the government announced an automobile industry development policy in 1998. It is forecast that global commercial vehicle production will decline by 22 percent to 2.6 million units in 2020, compared to 2019. The coronavirus pandemic affected the global auto industry as plants remain shuttered and caused a 3.0 percent decline in global real GDP in 2020.

The Vietnam automobile industry is no exception. According to a report from the Vietnam Automobile Manufacturers’ Association (VAMA), the industry registered only 11,761 units — consisting of 7,796 passenger cars, 3,652 commercial vehicles and 313 special purpose vehicles — in April 2020. It indicated that sales of passenger cars decreased by 40 percent, commercial vehicles by 26 percent and specialized vehicles by 16 percent, compared to the previous month. The whole automobile market over the first four months of 2020 decline by 36 percent. The main reason for the decline in sales was the impact of the coronavirus pandemic, for which the country imposed social distancing measures to prevent the spread of the coronavirus outbreak. People also bought fewer new cars.

It is estimated that 70 percent of the supply of Vietnam’s automobile vehicles are domestic assemblies while imported assembled vehicles make up the remaining 30 percent. In Vietnam, there are three main forms of automobile production: Complete Knocked-Down (CKD), in which factories in Vietnam have imported 100 percent of components for vehicle assembly; Semi-Knocked-Down (SKD), in which factories assembled vehicles with some localized components; and Complete Built-Up (CBU) which refers to vehicles that are manufactured 100 percent abroad and imported to Vietnam.

Vietnamese automobile traders have to pay taxes and high fees which go to state revenues, and face concerns about urban congestion. Domestic firms are weak for a variety of reasons. They have not yet cooperated, associated and........

© The Diplomat