Photo: Viet Tuan
Mr. Pham Van Dung, Managing Director of Ford Vietnam, spoke with VET about its business development strategy prior to AFTA taking effect in 2018.
■ According to the roadmap for the ASEAN Free Trade Area (AFTA), motor vehicles of less than ten seats imported from ASEAN countries will be subject to a tariff rate of 0 per cent in 2018. Do you expect the ASEAN Free Trade Agreement to move ahead as scheduled?
AFTA is established with the aim of liberalizing ASEAN trade by eliminating tariff and non-tariff barriers within the region. This will require ASEAN manufacturers become more efficient and competitive in global markets. At the same time, consumers in ASEAN will have broader access to affordable vehicles with high quality local content.
Companies must have suitable strategies to cut production costs, improve their capacity and competitiveness, and deliver high quality products with safety, quality, and smart and green features, adding more value.
Ford always supports agreements on free trade and regulations and policies that provide equal opportunities for every company. We also always want to work closely with the government to develop effective policies to build a competitive automobile industry for Vietnam that can compete in regional and global markets.
According to the AFTA roadmap, import taxes on cars from the region will fall to 0 per cent in 2018. This will result in challenges as well as opportunities for automobile companies in Vietnam. Companies can view ASEAN as a common larger market. We hope the Vietnamese Government will continue to support the industry with clear and consistent policies and regulations within its Master Plan approved in 2014.
■ How will Ford Vietnam structure itself industrially once AFTA is implemented?
Ford stays consistently global with the “One Ford” strategy, where we optimize our resources to deliver the best products to consumers in the shortest time and at the lowest cost. In Vietnam, Ford has a market share of about 10 per cent and our products and services are widely appreciated by Vietnamese customers. Our plant in northern Hai Duong province is still expanding to meet production requirements. Technology transfer, human resource training, and network development are our focus. Ford hopes that we can go further in bringing better global products to a new generation of customers in Vietnam.
■ Can you tell us about Ford Vietnam’s business performance this year?
The “One Ford - One Team, One Plan, One Goal” strategy has enabled Ford to be one of the three fastest-growing automobile brands in Vietnam, with annual growth of around 70 per cent over the last three years.
In recent months Ford has continuously recorded its best-ever performance in terms of sales. Sales grew at the highest ever level for the month of May, by 33 per cent. Eco Sport, Ranger and Transit each continued to lead in sales in their respective segments during the month and also year-to-date, driving Ford’s 2016 sales up 53 per cent to 11,247 units and seeing it remain one of the fastest-growing automotive brands in Vietnam.
Sales of the segment-defining Ranger in May increased 31 per cent year-on-year to 1,074 units. The Ranger - Vietnam’s best-selling pick-up truck since 2014 - has retained its top position this year with year-to-date sales soaring 97 per cent to 5,439 units.
The popular Eco Sport remained Vietnam’s best-selling compact SUV this year, with May sales increasing 49 per cent year-on-year to 431 units. Year-to-date sales were 32 per cent higher, reaching 1,912 units, as individual customers continue to appreciate the Eco Sport’s unique combination of small-car practically and the agility of an SUV.
The popular Transit maintained its leading position in the commercial van segment in May, with sales rising 42 per cent to 641 units while year-to-date sales increased 54 per cent to 3,028 units, as the Transit continues to delight business owners and operators with its durability, versatility, and value proposition.
The sporty Fiesta, equipped with the revolutionary 1.0L EcoBoost engine, saw sales jump 31 per cent to 68 units in May, pushing its year-to-date total up 4 per cent to 296 units. The 1.0L Eco Boost engine was recently named 2016 International Engine of the Year by UKIP Media & Events Automotive Magazines in the “Under 1.0L” category for the fifth consecutive year.
■ What are the opportunities and challenges in Vietnam’s business environment?
With a potential market of 90 million people the future is waiting for Vietnam. The country is at the beginning stages of motorization and economic development. Transport demand is high and increasing with the pace of urbanization. Its young, tech-savvy consumers are keen to have the most advanced products. Vietnam is one of the most energetic markets in the region.
The most famous automobile brands in the world have come to Vietnam. The auto industry is growing here. The participation of Vietnam in free trade pacts like the AFTA and the TPP will create a broader business environment for all stakeholders. Competitiveness is a necessary condition for development.
Among the challenges enterprises face is consistency in policies and development strategy as well as the interaction among ministries and government agencies. We hope that with better integration and improvements the business environment will be even more attractive for foreign investors.
■ What do you see as Ford’s recipe for success in Vietnam?
Thanks to economic development and higher incomes, motor cars are becoming more and more affordable for young families. Moreover, cities are expanding and roads are improving while the petrol price is stable.
At Ford we continue to follow the One Ford strategy and provide global products in Vietnam that meet the various demands of consumers. The strategy has been fundamental to the progress we have made in recent years and is also fundamental for our performance going forward. In many ways we are starting to see the full benefits and strength of the One Ford strategy, and we see an opportunity to accelerate our progress to drive operational excellence and profitable growth for all.
For Ford Vietnam, the One Ford strategy has provided Ford vehicles of consistent and global quality to Vietnamese consumers. Owning a Ford in Vietnam is no different to owning one in the US or the UK in terms of quality, design and driving experience.
Ford Vietnam also makes positive social contributions, with thousands of hours spent on corporate social responsibility (CSR) activities last year. More than 10,000 drivers received free training in safe driving and eco-friendly skills and dozens of other community activities were held. We were honored to receive a Second Class Labor Medal from the Vietnamese Government for our 20 years of contributing to the country.
■ What do you see for Ford’s development in Vietnam by 2020?
Ford will continue to grow evenly across all segments, with the Transit in commercial vehicles, Ranger in pick-up trucks, Fiesta and Focus in passenger cars, and the seven-seat Everest and the compact Eco Sport in urban SUVs. The Fiesta, Ranger, Focus Eco Sport and Everest are global products, led by the One Ford strategy.
In the years to come Ford will continue to follow the One Ford strategy and supply all segments with global products that meet the diverse demands of local consumers. We will also expand our dealer network to bring about better and more convenient access to Ford products and services. The important thing is that we will constantly focus on improving customer satisfaction to reach a higher ranking from independent measurement organizations such as JD Power. In 2015 Ford was ranked second in customer service.
Together with its core business of automobiles, Ford is also a pioneer in studying smart mobility solutions for the world. We aim at a better life for people by changing the way the world moves.
In addition to its business activities, Ford Vietnam will also focus on CSR activities. Driving instructors will become a key target audience of our road safety training, which is a new feature of our program over the next five years. Promoting traffic safety will continue to be a key focus.
■ Competitors are arriving in Vietnam, in particular imported cars from Thailand. How is Ford Vietnam responding to this pressure?
Vietnam’s automobile market will be more active with the appearance of various global brands. I believe that competitiveness is an engine for development. Ford will continue going further with our One Ford strategy and four brand pillars: Quality, Green, Safety, and Smart, and we commit to bringing the greatest satisfaction to our consumers. Being in the Top 3 fastest-growing brands in Vietnam for the last three years, with 70 per cent growth annually, is proof we have taken the right direction to win customers’ hearts.
■ Given the current economic outlook, has Ford Vietnam revised its short-term forecasts for the local market?
2016 is still seen as a year of growth for the auto industry. This is due to consumer confidence increasing and improvements in small and medium-sized enterprises. I believe that business in construction, telecommunications and agriculture as well as transport will continue to grow in the years to come. This is why pick-up trucks and commercial vehicles are on an upward trend. The passenger car segment is shifting to small but smart motor cars with sufficient engine capacity, safety and fuel efficiency. Though we will reach the milestone of fully integrating into AFTA in 2018, there may be some interruptions in the market but we remain positive about market trends.