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24 Jan 2018

Industry

Vietnam’s new rule on auto industry impeding Thai exports Growth expected in other markets (Current Issue No. 2897 Full Ed.)

Beginning January 1, 2018, Vietnam's import tariffs on automobiles from ASEAN member states have been slashed to zero percent, in accordance with the ASEAN Trade in Goods Agreement (ATIGA), from previously 30 percent on passenger cars and 5 percent on pickup trucks. This change has given high hopes to many that Thai auto exports to Vietnam will rise substantially; some auto producers have already relocated production bases for some models from Vietnam to Thailand since they can thus benefit from the tax-free structure.

Contrary to that positive sentiment, Vietnam's authorities have introduced strict new regulations for their auto industry, which may lead to more difficult importation of vehicles. KResearch views that if vehicle producers and the government of Vietnam can reach a mutually satisfactory agreement, Thai exports to Vietnam will not be seriously affected. If normal shipments can be resumed in 1Q18, our auto exports to Vietnam may reach around 31,000-34,000 units during 2018, versus the estimated 33,000 units sent there in 2017.

New KR Logo_แนวนอนNew KR Logo_แนวนอนNew KR Logo_แนวนอนOverall, Thai auto exports to global markets will not be greatly affected by Vietnam's new regulatory issue in 2018, given many positive factors elsewhere. KResearch expects Thailand to export between 1,160,000 and 1,190,000 automotive units, equal to growth of 2-4 percent YoY, this year. Key markets with good potential include Oceania, Asia and the Mideast.

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