Equity Analysis /

Vietnam Autos: Brighter outlook, but more competitive

    Vu Nguyen
    Vu Nguyen

    Autos & Parts

    Rong Viet
    12 September 2019
    Published by

    In this 14-page report on Vietnam's auto industry, we provide detailed analysis of Hang Xanh Motors Service and Danang Rubber Company.

    Automobile supply recovered substantially in 1H 2019

    Since late 2018, most producers that export cars to Vietnam met the requirements.

    Thanks to the removal of tariffs under ASEAN Trade in Goods Agreement (ATIGA), the number of cars imported from ASEAN nations, especially Indonesia and Thailand, witnessed a surge, intensifying the improvement in auto supply of total market in1H2019.

    High demand and the decline in selling price boosted the sales volume of the auto market in 1H 2019

    Demand for autos remains strong

    2018 weak car supply did not meet high demand, increasing the need for automobiles in 2019.

    Vietnam’s disposable income per capita has improved quickly over the last five years and the trend may be ongoing from 2019 onwards.

    Selling price of autos declined in 1H 2019

    After the removal of tariffs under ATIGA, prices of autos coming from Indonesia and Thailand, ranging from VND 300 to 500 million, are suitable for income of most domestic residents. In addition, customers may have more choices due to a wide diversity of models from Indonesia and Thailand.

    The automotive outlook for the market in 1H 2019 was brighter but more competitive. Therefore, car dealers approached big promotions and decreased selling prices.

    2H 2019: we believe that competition remains fierce and may even increase 

    However, we believe that middle-car dealers may face more intense competition than luxury car dealerships, as:

    • High-end car class targets affluent customers, who often prioritise their favourite brands over selling price.
    • Luxury auto customers have fewer choices than middle-class ones in terms of car dealerships and models.
    Company Coverage:
    Hang Xanh Motors Service (HAX) – Neutral with a target price of VND19,600 

    Danag Rubber Company (DRC) – Accumulate with a target price of VND23,600