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Luxury items

Released at: 08:22, 07/07/2014

Luxury items

Mr Andreas Klingler, General Director of Porsche Vietnam, discussed the country's motor car market with VET's Ngo Hai.

by Ngo Hai

How do you view the opportunities on offer in Vietnam this year in the motor car business in general and in imported cars in particular?

The first quarter of the year has now ended and total sales were higher than in the first quarter of 2013. This was true for both imported cars and locally-produced cars. Reasons for the higher sales include lower registration fees in Ho Chi Minh City and cuts to import taxes made at the beginning of the year.

As we do not expect any major obstacles over the remaining nine months of the year we are confident that the trend seen in the first quarter will continue. Total car sales for this year are estimated to come in at around 145,000, which will be an increase of some 15 per cent against 2013. Even though this sounds positive we are still behind the sales figures from 2008, of 160,000 units, and 2009, of 185,000 units.

What are the challenges and difficulties authorised importers like Porsche face in Vietnam? What solutions do you believe are needed?

Vietnam is, in general, a difficult car market as prices are extremely high and Vietnam is among the most expensive countries in the world to own a car. Conversely, GDP remains at a very low level. So car manufactures in Vietnam are only able to sell highly-taxed cars to just a very small group of people that can afford them. This results in a very small number of cars being sold per year per capita. The total number of cars now on the road is estimated at around 1.3 million, and with a population of 92 million this means that out of every 1,000 people only 14 own a car. In Germany, which has 10 per cent fewer people than Vietnam, the ratio is roughly 500 cars per 1,000 people.

Vietnam’s infrastructure is still a problem that needs to be addressed. More roads are urgently needed together with a clean and adequate public transport system. Clear, transparent and long-term policies are also needed to support investors in determining whether their investments are paying off. There are currently too many car-related taxes and these should be cut and the same conditions should be set for both locally-produced and imported cars.

What level of competition is there in the luxury car segment?

Competition is good overall as it leads to improvements in quality and services. We would be happy if more car manufactures arrived in Vietnam but based on the existing conditions and size of the market I’m afraid this will not happen soon as smaller manufactures cannot be profitable here due to the high retail prices and resultant low sales volumes.

Porsche stands for top quality and outstanding services. Our products receive awards all over the world. In Vietnam we are the market leader in the various high-end specific Porsche segments. As Porsche is growing successfully worldwide it is more less a matter of obtaining enough cars for Vietnam. We are working together with our headquarters in Germany to produce more cars for Vietnam in the near future. The Cayenne and Panamera are already extremely successful in the country. With the launch of the smaller SUV, the Macan, at the end of this year, we will record sales of nearly 200 units per year shortly.

What is needed from the government to improve the local car market?

As I mentioned, Vietnam’s car market is still very small due to the country’s high taxes and poor infrastructure. In order to have a sizeable car market, car-related taxes need to be cut so that the middle class can afford to purchase motor cars. At the same time, infrastructure projects need to be developed faster in order to cope with greater number of vehicles on the road. Policies also need to be transparent and reliable so that investors, manufactures and local car producers can be certain that their investments in Vietnam are worth it.

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