Vietnam, officially the Socialist Republic of Vietnam is the easternmost country of the Indochina Peninsula in Southeast Asia.
Chapter 1: Economic and business environment
Estimated 92.7 million inhabitants as of 2016
|Major cities|| |
Ho Chi Minh City, Da Nang, Haiphong
Vietnamese (vi), English (en), French (fr), Chinese (zh), Central Khmer (km)
2,111.14 USD (2015)
|Unemployment rate|| |
|Main industries|| |
GDP Composition by Sector:
Industrial Production Growth Rate:
VND Vietnamese đồng
|Interest rate|| |
|Political key info|| |
Vietnam remains one of the world's four remaining one-party socialist states offically espousing communism.
The country is actively opening up for foreign investments and is making it easier for foreign investors
Chapter 2 : Automotive market, segments & sales
|Total Car park|| |
20 cars per 1000 inhabitants
|New vehicle registrations (Cars, LCV, Trucks)|| |
New Car Sales in 2015 : 244.914
New Car Sales in 2017 : 250.619
|Top 5 brands (total market)|| |
|Model preference top 5 (total market)|| |
Toyota Vios - 22260
|Dealer network (including fleet dealer network)|| |
No or very limited networks. Mostly individual dealers.
Vingroup has the Vinfast dealer network that will be distributing Chevrolet from 2018 onwards
|Used car market/renewal cycle|| |
The domestic used-car market is big in comparison with the new car market. The total value of the second hand market is $3 billion per year as estimated by Anycar Vietnam JSC.
Chapter 3: Company car market
|Total Fleet Park (company cars)/Fleet penetration in total fleet sales|| |
Fleet Sales are not measured, but the estimate is below 20.000 units
|Evolution fleet sales (last 5 years)|| |
Increasing due to the shift from motorcycle to car
|Top 5 fleet brands (fleet market)|| |
|Fleet Model preference top 5 (fleet market)|| |
1. Toyota Hilux
Chapter 4: Taxation & legislation
|4.1 Car Taxation|| |
Only registration tax and no annual road tac,
The amount of Special Sales Tax is depending on the engin size.
Imported vehicles from outside of ASEAN to Vietnam are subjected to import duties (30%), special sales tax (40 - 150%), VAT (10%) and corporate income tax ( 22%, paid by business, but included in the price).
Imported vehicles from ASEAN to Vietnam are NOT subjected to import duties (30%).
|4.2 Income tax – Taxable persons||Tax is due by either car owner, car buyer or car user|
|4.3 Company car||Car costs can be deducted from the corporate income tax, at a variable rate between 3.33% and 16.66%|
|4.4 Income taxes – drivers’ personal taxation||No taxation on income. |
Corporate vehicle fee paid based on company regulations
|4.5 Electric vehicles||10 - 20 % of Special Tax is dued for EV car in Vietnam. However the infrastracture for the EV car is not provided at all and so the EV car use is not realistic.|
|4.6 Future developments|| |
Every 1-2 year the tax regime changes.
As Vietnam needs funding for infrastructure and other investments, tax is not expected to decrease.
|4.7 Legal background (import taxes)||Imported vehicles from outside of ASEAN to Vietnam are subjected to import duties (30%). |
Since Jan 1, 2018, Imported vehicles from ASEAN to Vietnam are subjected to zero import duties.
Chapter 5: Car policies
Company Car entitilement
Mainly tool of trade vehicles
Which sectors provide most fleet cars?
Industry, Pharma, Agriculture
|Entry level / Junior level||will depend on the location, type of road, load requirements|
|Senior sales / management level||Toyota Hilux |
Chapter 6: Funding methods
|Overview of penetration of funding methods (buy or lease statement)||Mainly purchase (by SME). Larger corporates will not provide cars to their employees except if it's really needed to do the job. Otherwise, motorcycles are provided|
|Type of suppliers (captive versus multibrand, international versus local…)||Most suppliers are small local dealerships with a fleet of under 10 cars. AVIS and Hertz are the only larger lease suppliers, but still very small in size.|
|6.1 Outright purchase:|
|Definition||Vehicle is registered as a fixed tangible asset on the balance sheet at the acquisistion value and depreciated over total useful economic life|
|Pro’s and con’s|
|Economic & legal ownership||Full ownership, included Risks asd Rewards|
|Business practices||still most popular way of acquiring a vehicle in Vietnam|
|6.2 Renting (Finance lease) :|
|Definition||Leasing without services with low residual value|
|Pro’s and con’s||No services included|
|Economic & legal ownership||economic ownership transferred to the lessee|
|Business practices||Not common and only few suppliers available|
|6.3 Full service leasing (operational leasing)|
|Definition||Leasing with services, mostly with chauffeur|
|Pro’s and con’s|| |
PRO : all inclusive
CON : expensive service
|Economic & legal ownership||Ownership remains with the lessor|
|6.4 Fleet Management|
|Definition||Backoffice management of owned car fleets (maintenance, tires,...)|
|Pro’s and con’s|| |
Labor intensive work outsourced to expert.
Costly add-on to already very expensive car cost
|Economic & legal ownership|
|6.5 Short term rental|
|Definition||Still the most common way to organise private mobility in Vietnam, STR is very common & lots of local suppliers offer services, with or without chauffeur. STR is considered to be any rent shorter than 6 months|
|Pro’s and con’s||Not that many con's. Pricing is usually rather low, vehicles are available basically anywhere. The only con might be that the STR fleet is usually rather old and can be poorly maintained|
|Economic & legal ownership||The STR company own the vehicle|
|Business practices||Few online tools, usually booking via phone or email|
|6.6 Other funding methods|
Chapter 7: Fuel
Fuel type segmentation
Fuel Price Evolution
Given the giant volume of motorbikes and cars moving on the road, the price of oil, gas and petroleum is always among the most frequently discussed topics in Vietnam.
The fuel cost in Vietnam has dramatically increased in the recent years, due to the rise in the global petrol price and mutual pressure of the economy. In 2005, the price for both diesel and Mogas 92 gasoline was kept artificially low level at roughly 5,000 - 7,500 VND per liter (40 – 60 cent at that time, about $1.52 per gallon). After 2005, the rise in the global fuel price and high rate of inflation in Vietnam caused the price of fuel in the domestic market to rise rapidly, although the government has already offset the losses to the suppliers.
Although the fuel price in Vietnam has risen significantly in recent years, it is still lower than many countries in the nearby or other areas.
Generally speaking, Vietnam fuel market is a competitive market with many suppliers. Among petroleum suppliers, Vietnam National Petroleum Corporation - or Petrolimex - is dominating the retailer market with about 60% of the market share, followed by Military Petroleum Corporation and Comeco Company.
Fuel card solution
Chapter 8 : TCO components
Lease price, taxes, fuel and chauffeur costs are the most important cost factors in the TCO.
Chapter 9: Safety, insurance and telematics
Vietnam is very immature when it comes to risk mitigation.
- Telematics are almost never implemented
- Safety is only now becoming something of a topic, especially outside of the cities, where a high mortality rate calls for action
Chapter 10: Environment
Trends in taxation, legislation and citry restrictions
Vietnam, like other ASEAN countries, increasingly relies on fuel imports with very volatile prices. CO2 emissions are equally expected to rise as fuel use increases. Air pollution, although also depending on the quality of fuel and emission control devices, will also increase. Due to rapid motorisation, transport GHG emissions are projected to rise to 87.8 Mt by 2020, a 76% increase in 10 years.
With increasing GDP/capita, growth rates of passenger cars are picking up and expected to continue to rise. It is important that new vehicles, passenger cars and also motorcycles become much more efficient in the country.
CO2 figures availability
In 2015, the Vietnamese government has mandated a fuel economy labeling program for locally assembled and imported cars with up to 7 seats. The car manufacturers or importers are obliged to publish fuel economy data for car models tested in Vietnam or in foreign renowned laboratories.
In Vietnam, the government is also catching up with the trend of “green vehicles” and promulgated tax incentives for hybrid vehicles. However, the implementation of these policies has so far been difficult due to an unclear definition and understanding of what is a hybrid vehicle.
Chapter 11: Mobility
Vietnam’s current mobility model is lacking a vision for the future. The transportation sector is under strain and underperforming, and this has driven the government to seek out innovative solutions that can both improve transport and boost overall economic competitiveness.
Grab Taxi is the main supplier for mobility solutions & offers bike-hailing/ride-hailing and delivery services.
- Congestions 6 AM - 9 PM
- Air pollution from gasoline engines
- Noise pollution
- Traffic safety issues
Chapter 12: Key trends to watch
Vietnam's GDP is growing and so is the disposable income of the growing middle class. The number of cars per capita is low (below 20/1000), so there's a lot of potential for OEMs. Due to the taxation however, the Vietnamese middle class family cannot afford a car.
This is a typical market where finance products and private lease can boost the industry.
Mobility solutions are slowly stealing market share from the motorcycles; Grab taxi is very cheap and is more convenient than upgrading from motorcycle to car.