Source: tinxe.vn

After the first 6 months, business was sluggish, production activities were stagnant, domestic automobile manufacturers and assemblers were heavily affected when the Government reduced registration fee by 50% and about to push back the deadline for special consumption tax. However, with the unpredictable development of the new COVID-19 pandemic, automobile businesses are in for further difficulties.

Hoping to resume production without social distancing

For the automobile industry, after social distancing ended in April, most dealers and businesses had resumed operation. However, according to a survey by the Ministry of Industry and Trade, the production and assembly capacity is currently only maintained at a very low level due to high inventory, up to 122.5%. The main reason is that automobile consumption is facing many difficulties due to the sharp decline in domestic purchase power.

On August 6, sharing with the Tien Phong, Mr. Nguyen Trung Hieu, Head of Policy Department of the Vietnam Automobile Manufacturers Association (VAMA), said that the COVID-19 returned with unpredictable developments. Enterprises are still producing and listening to the situation to adjust their production and business plans accordingly.

According to Mr. Hieu, in the immediate future, auto enterprises in Da Nang and Quang Nam are the first to be affected, namely Truong Hai Auto Company (THACO), and Tan Chong Motor, who has an automobile factory in Quang Nam. THACO contributes up to 55% of the budget for Quang Nam province. As the leader of this provincial People’s Committee recently said, they might have to consider the proposed plan not to regulate the budget to the Central and return to apply for subsidies from the central.

Also due to the influence of COVID-19, Vietnam Motor Show 2020 – the largest auto festival in the country, jointly organized by VAMA and Vietnam Automobile Importers (VIVA) once a year. This last October ant was canceled.

Ford Vietnam is one of the most damaged companies in the automotive industry due to the COVID-19 outbreak. Their factory in Hai Duong has just received an additional investment of $ 82 million to expand its scale since the beginning of the year, expected to be completed by mid-2022. Due to the impact of the COVID-19, from March 27, production activities had to be halted to social distancing, many foreign experts had yet to come to Vietnam. After the pandemic had subsided, the factory was back into operation in mid-July.

However, according to Ford’s regulations in the US that are applied globally, most office workers in Vietnam are working from home. Mainly, the production, sales and service departments are still operating and must fully comply to COVID-19 epidemic prevention regulations, ensuring safety for everyone.

Commenting on the Government’s move to reduce the registration fee by 50% since the beginning of July, followed by an extension for the deadline for paying special consumption tax (SCT) for domestically manufactured and assembled cars, representative of Ford Vietnam said: “The support solutions of the Government are very precious to businesses. However, due to the global influence, the source of imported raw materials from Ford to Vietnam for production was also interrupted, the shopping demand of people decreased sharply with a cautious sentiment.

Previously, Ford Vietnam also planned to assemble the Escape model after 5 years of absence from the market. However, due to the impact of the COVID-19 epidemic, the supply of raw materials is difficult to import, so this model may not be released in time this year at the right “golden time” with registration incentives.

A chance for businesses to earn more capital

According to representatives from Honda Vietnam, the COVID-19 epidemic caused the company’s car business to decrease by nearly 8% in financial year 2020. However, thanks to the Government’s support policy such as a 50% reduction in registration fee, on July 20, Honda Vietnam resumed assembly and released the CR-V 2020 model after roughly 3 years of import from Thailand, ready for distribution.

Similarly, Mitsubishi Vietnam has resumed assembly at the factory in Binh Duong and launched its best-selling model, the Xpander, after nearly 2 years of importing from Indonesia.

This move by businesses shows that they are continuing to expand domestic production, while adding more supply of vehicles to meet the increasing demand of customers. In addition, local assembly will help customers who buy cars save a lot of money from the policy of 50% reduction in registration fee recently issued.

Dr. Le Dang Doanh, former Director of the Central Institute for Economic Management, predicted that in the upcoming time, with the complicated developments of the pandemic, essential aviation industries will face many difficulties. “In particular, people will be cautious, leading to a decline in sales for many products such as clothing, furniture, cars, and electronic equipment, and the real estate market will also be affected”.

The head of VAMA policy forecasts that the auto market will have a negative growth of at least 15% in 2020. If the epidemic prolongs, car production and sales in Vietnam can be at its lowest in 10 years.

To support enterprises, the Ministry of Industry and Trade proposed passing resolutions of the Government on solutions to develop supporting industries. In particular, amending the provisions of the Law on Special Consumption Tax (SCT) for domestically produced cars in the direction of giving incentives to the rate of domestic production; VAT in the direction of early tax refund to create conditions for businesses to accumulate more capital.

According to data from VAMA, in May, the new car market flourished with an increase of 62% compared to April. In June, the total sales of members reached 24,002 vehicles, an increase of 26% compared to May. In the past 7 years, when the government’s policy to support 50% of registration fees started to take effect, the sales results of firms have improved.

Source: autopro.com.vn