microenvironment final group project topic the car industry

NATIONAL ECONOMICS UNIVERSITY

INTRODUCTION

The car industry is evaluated as one of the spearhead industries in VietNam, which takes a very important role in the development of other markets Due to that, the strong development in the car industry is indicated as a factor of positive motivation for related markets, and boost the

growth of the country’s economy

Due to peculiar technical characteristics of the car market, throughout the civil manufacturing industry, the car industry has the greatest link of outputs and inputs, and the highest combination of technology For all those reasons, this market has a great effect on the process of

industrialization of the national economy

In the term of 10 years, never has the car industry’s sales as high as 2022; after the 2 years of discontinuity, the Vietnamese car market recorded a strong growth in 2022 The consumer

received a lot more new products, and also boosted their demand for cars after repression

Following the data of VAMA, Hyundai Thanh Cong and Vinfast, the total sales in November was even higher than the previous record which was built in 2019

The innovation and development in the car industry, also created a new tendency of using electric cars, which affected the demand and supply curve of this market in a worthwhile way Considering this information is also important to direct a new vision of traffic and the environment of VietNam

Our assignment presents an in-depth research and overview of the car market, and evaluation of the main factors affecting the demand and supply of car in the previous year; also analyses the tendency of producers and consumers in the future, as well as the role of Vietnamese government in stabilizing the domestic price of car by using microeconomics theories.

INDEX

1 The main manufacturers in Viet Nam 3

1.1 HYUNDAI THANH CONG VIET NAM cccccccccccectecteceeeetiseeeeetseeteestieenteeneteees 3

1.2 VAMA (VietNam Automobile Manufacturers Ássoc1atIof8) cành He 3

2 Type of market

5

II Demand and factors affected demand of car in Vietnam over the last years

1 Overview of the demand in the car industry 6 1.1 Hybrid cars on the r1S€§ L1 0200201121211 12111211111211011111 1111011111 1110111110111 1H Hy ky 7 IÿÄAH suy ses:iađadđadiiâŸÝỶÝỶÝ 7

I8 0 00/00 7 2 Factors that influenced demand 7 PN vu su 000.) nh aa 7 PC Jin nn Ắ dd 8 2.4 Consumer’s interest affecting cars SuppÌy c2 1 19H HH H101 e 10

3 Consumers expectations and future trend 11 II Supply and factors affected supply of carin Vietnam over the lasf years 12

1 Supply for cars in Vietnam 12

4, Government tax policy 14 5 Number of manufacturers 15 6, Expectations, trends 15

IV Role of government in market economy 16

1 Market structure: = a

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1 The main manufacturers in Viet Nam

In Viet Nam, there are a lot of automobile manufacturers These are the leading ones:

1.1 HYUNDAI THANH CONG VIET NAM

Ninh Binh is home to the joint venture between Hyundai Thanh Cong (Vietnam) and Hyundai

Motor (South Korea) This company manufactures and assembles vehicles under popular

Hyundai brands, including the Santa Fe, Elantra, Grand 110, and Tucson Hyundai Thanh Céng

plans to grow and boost output in the near future

In the past two years, the company with the most revenue has been Hyundai Thanh Céng The business sold more than 81000 copies in 2020

The Accent and Grand i10 are the most popular vehicles Additionally, the market is made up of practically all other Hyundai automobile models Santa Fe is the top-selling 7-seater SUV in size D, while Kona is just behind the Kia Seltos and Toyota Corolla Cross in terms of sales

1.2 VAMA (VietNam Automobile Manufacturers Associations)

THACO AUTO TOYOTA ` , VEAM MOTOR

TAN CHONG GROUP chu yéa déag tién phone VINAMOTOR

4 @DOTHANH Ze, MOTORS

Drive your Aentition

A non-profit, non-governmental organization called VAMA was founded voluntarily by car companies with business permits in Vietnam The VAMA's operational goals include promoting the growth and exceptional advancement of the country's automobile sector in

particular, which helps the economy and the community as a whole Currently, VAMA consists of 17 brands or businesses, including Ford, Toyota, Daewoo Bus, Hino, Honda, Isuzu, Mekong Auto, Mercedes-Benz, Samco, Suzuki, Tan Chong Group, Thaco Auto, Mitsubishi, Veam Motor,

and Vinamotor

Toyota Motor Vietnam

Leading automaker in Vietnam is Toyota Although it offers a wide variety of products, its

product portfolio is not consistent Previously, Toyota frequently had 4-5 model lines in the top

10 lists of automobiles Only Vios is left now While Hyundai Santa Fe has long since supplanted

Fortuner, Innova is well behind other MPV models In 2020, Toyota Vietnam will sell 70,692

cars

Thaco

The Vietnamese company Truong Hai Automobile Joint Stock Company (Thaco) is an expert in producing, assembling, importing, exporting, distributing, maintaining, and fixing cars In order to import their goods to Vietnam for assembling, Thaco is currently working with numerous significant global automakers Thaco has invested in overseas automakers like BMW (Germany), KIA (South Korea), Peugeot (France), and Mazda (Japan) In order to produce trucks and buses in Vietnam, Thaco also works with Hyundai and Foton The business produces 10,000 vehicles yearly with the help of cutting-edge technology and top-notch labor.

such the Mitsubishi Pajero, Mitsubishi Grandis, Mitsubishi Outlander Sport, and Mitsubishi Triton, have been introduced by the business in Vietnam

Ford

Ford Vietnam Limited is a partnership between Song Cong Diesel Company and Ford Motor Corporation (USA) (Vietnam) In Hai Duong, the business operates an assembly facility with an annual production capacity of 14,000 automobiles EcoSport is the most well-liked CKD Ford vehicle in Vietnam

Honda

Honda Vietnam Co., Ltd was founded in 1996 and primarily produces vehicles and motorcycles But the business didn't receive a license to build and assemble cars in Vietnam until 2005

Currently, Honda has assembly facilities in Vinh Phuc and Ha Nam Honda's market share in the

vehicle industry is modest, despite the fact that it dominates the motorcycle area

Suzuki

At 1996, Suzuki opened a facility in Binh Da Industrial Park, Dong Nai, where it first assembled vehicles and motorbikes in Vietnam Additionally, the business constructed a brand-new assembly facility in Bien Hoa's Binh Long Industrial Park Suzuki's commercial vehicles now have a poor level of consumer favorability in Vietnam, which results in low sales Sales of trucks with the Suzuki name, though, are rising Suzuki now has a best-selling model, the XL7, after

years of battling with product strategy

2 Type of market

There is oligopoly in the automotive industry This 1s due to the market's small number of enterprises, none of which can prevent the others from exerting a sizable amount of influence The market share of the major companies is calculated using the concentration ratio Instead than collecting prices from the market, companies in an oligopoly determine pricing, whether collectively—in a cartel—or under the direction of one enterprise As a result, profit margins are greater than they would be in a market with greater competition

II Demand and factors affected demand of car in Vietnam over the last years 1 Overview of the demand in the car industry

5

Sales

# VAMA & Hyundai © Vinfast

VietNam Auto Sales Till november 2022

50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000

(Data belongs to VAMA, Hyundai Thanh Céng, Vinfast)

The report from VAMA showed that, total sales of all the firms belong to VAMA till November

is 369,334 cars, rose 43% compared with sales in 2021 (touring cars: 289,678 rose 63%; commercial cars: 74, 954 rose 0,3%; specialized cars: 4,703 cars declined 9% compared to 2021) Hyundai total sales is 72,037 cars and Vinfast sales is 18,052, total consumes reached

This significant number did not include sales of big firms (due to their unpublic) like Nissan,

Volkswagen, Subaru or luxury brands like Mercedes-Benz, Audi, Volvo or Jaguar Land Rover.

A major auto market m the region is being marked by the milestone of 500,000 automobiles,

according to the former director of a significant Vietnamese automaker Thailand, Indonesia, and Malaysia are the current Southeast Asian markets with sales of more than 500,000 vehicles each In the first ten months of this year, Indonesia consumed 851,000 cars, exceeding the milestone set by sales for the entire year of 2021 (more than 703,000 cars), while Thailand consumed

750,000 cars and Malaysia consumed 577,000 cars After two years of pent-up demand caused by the pandemic, it is comprehensible when the purchasing power of cars increases significantly when the desire for travel among people is great This has led to predictions that the auto market will hit the milestone of sales of 500,000 vehicles Additionally, it is natural that people will choose to safer and more advanced means, like cars, as the economy improves [12]

1.1 Hybrid cars on the rises

In 2020, Toyota is the first brand to put hybrid cars on sale in the popular segment with

the Corolla Cross model At that time, this car was a rare choice on the market that used a

combination of an electric motor and an internal combustion engine After 2 years, consumers also have interest in more types of hybrid cars on the market such as Suzuki Ertiga, Nissan

Kicks, 1.2 Electric car

Pioneer in this field is Vinfast, which introduced an abundant electric car to the market with a

wide range of price VF e34 was the first electric product, and then they introduced more luxury brands like VF 5/VF 5 Plus, VF 8 and VF 9 The train which transported 999 VinFast VF 8 to America was a significant mark of the automobile industry when we went into one of the biggest and the most harsh industries in the world

1.3 Positive rise in SUV/CUV

In recent years, SUV has been one of the priority choices of consumers in buying a new

car After November, VAMA sold 110,000 SUVs including 83,000 sedan and 50,000 MPV, which set a record in the Vietnamese market Because of that there were more versions of cars which were introduced to consumers.

2 Factors that influenced demand

2.1 Income of consumers (Forbes)

GDP per person (USD)

3694 2020 3526

3425 2018 3231

2974 2016 2764

2582 2014 2585 ————$ 2355 2012——————————— 2]/8

stable, and have enough conditions to buy new vehicles In 2021, due to the pandemic, the

income of people was low that they had to focus on more important works to prevents the

diseases Step out of that time, the income is higher, so it’s a factor which had a great influence

on car market in particular and the whole market in general [13]

Due to SSI Research, GDP per person of Vietnam is on the upward trend, and it is estimated to be 8-20% more in 10 years “Cars will soon turn into popular transport whose ratio is as high as other countries in Southeast Asia.” (Vietnam Registry Department) This lead to more opportunities for the automobile market to grow

2.3 Relevant goods cost - Complementary goods

PETROL PRICES FROM JANUARY TO JUNE 2022 (SOURCE: VINFASTAUTO.COM)

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» X x » » » x X ` » ` s Vv » %v ^ Vv Vv

Average cost of gasoline in Vietnam from May 2020 to December 2022 (Source: take-profit.org) Coming along with the fluctuation of gasoline price from 2020 to 2022, the demand for cars is also affected but in different ways depending on the type of cars If gasoline prices increase, the demand for cars that use it as the main source of fuel will indeed decrease However, consumers can swap to considering electric cars or those that don’t use petrol to operate, inevitably increasing the need for them The opposite is also true, but with a more significant decline rate for electric cars and the others compared to gas

- Substitue goods Bus

500 400

Motorbikes

The number of cars and motorbikes in Vietnam from January to

The total number of cars in use

(Source: Vietnam Registry

After the recent covid

19 pandemic, cars’ prices have been going down quite a bit to make up for the loss during the pandemic As a result, more people are interested in buying themselves a car while the price is still low Although it is undeniable that most Vietnamese people prefer using motorbikes, the car market still slowly expands, meaning that Vietnamese’s interest in cars is rising, therefore allowing Vietnam’s car supply to keep on expanding and developing This indicates that Vietnam

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is starting to make its way to a new automotives age, changing from motorcycles to cars as the main personal vehicle

2.4 Consumer’s interest affecting cars supply

As environmental problems are becoming more and more serious, many people nowadays tend to minimize the burden for the earth as much as possible When it comes to the cars market, electric cars are chosen by most consumers who want to keep on protecting the environment instead of going for the traditional ones that use petrol or oil Especially when the government issued a decree that allow battery-powered electric cars owners to save the

registration fee that they must pay if they own a petrol-fueled or oil-fueled one Recently, SUVs are the top SUV/CUV revenue in Vietnam from 2017-2022

priority of consumers when (Source: VAMA) purchasing cars Because of

that, more and more SUVs/Cuvs

will be appearing in Vietnam’s 201 car market in 2022 SUV/CUV revenue in 2022 is sure to be the highest, with a streak of 6 years 2020 not having to face any

choose from, allowing all

customers to choose which one they think is the best for them

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