Listed automobile companies will face a challenging and volatile year in 2017 on policy changes and rising competition from imported products (Photo: cafef.vn)Hanoi (VNA) - Listed automobile companies will face a challenging andvolatile year in 2017 on policy changes and rising competition from importedproducts.
Asthe sector outlook is unclear, some companies have been cautious with theirforecast for 2017 performance. For instance, Saigon General Service Corporationperformed well in 2016, but the company is quite wary of its results this year.
Challengesinclude policy changes expected to trigger greater competition in the domesticcar market as taxes drop, allowing imported cars to compete with localproducts.
VietDragonSecurities Corporation (VDSC) said in its 2017 outlook for the automobileindustry that the domestic car market will see an increase of automobileimports from ASEAN countries as car import tariffs have dropped to 30 percentfrom 40 percent in 2016, and will eventually fall to zero early next year.
Meanwhile,Vietnamese automobile companies are waiting for the Government to decide inJuly whether car manufacturing and importing business should be conditional ornot.
Ifthe car industry becomes a conditional sector, domestic car companies would beprotected by the Government, but they would be limited in access to foreigninvestment since a conditional business must follow some rules to ensure thecountry’s security and safety.
Foreigninvestors would be limited in investment in the Vietnamese car industry,reducing foreign capital in the industry, and some of the foreign-invested carfirms could suffer.
Automobilecompanies had mixed performances in 2016, with Truong Long Auto and TechnologyJSC and TMT Motors Corporation being decliners and Hoang Huy InvestmentServices Corporation among the gainers.
TruongLong Auto and Technology JSC last year earned 1.2 trillion VND (53.3 millionUSD) and a net profit of 53 billion VND, a year-on-year drop of 28.6 percentand 39.25 percent from 2015.
TMTMotors Corporation earned 2.5 trillion VND and a post-tax profit of 49 billion VNDin 2016, down 24.8 percent and 74 percent from 2015.
Amonggainers, Hoang Huy Investment Services Corporation was able to increase itsrevenue by 71 percent to 1.04 trillion VND and profit by 147 percent to 201billion VND.
However,those companies’ stocks have declined from their peak in January 2016.
TruongLong Auto and Technology JSC’s shares closed on February 23 at 51,000 VND pershare, up 3 percent from 2016’s ending price. The company share, listed as HTL,has fallen more than 50 percent from last year’s highest price of 108,000 VND.
TMTMotors Corporation finished at 12,700 VND per share on February, down nearlythree-quarters from last year’s peak of 45,000 VND per share .
Theshares of Hoang Huy Investment Services Corp have fallen more than 58 percentsince its 2016’s high of 9,700 VND.
Market confidence remains positive for 2017.
Despitethe challenges, there is still a bright future for the industry in 2017,according to VDSC.
Themarket demand will increase as customers are expected to change their types oftransportation on higher average income, VDSC said.
Vietnam’sper capita income was estimated to reach 5,668 USD in 2016, VDSC said, addingthat some statistics show a higher demand for car ownership when a per capitaincome exceed 4,000 USD.
“Vietnam’sautomobile retail industry is now in its preliminary stage of motorisation,”VDSC said. “Though the growth rate of automobile sales is slowing down, theexpected booming demand for cars in the country is still ahead.”
Vietnameseconsumers have maintained high confidence in the last few quarters and this isalso a driving factor for car consumption. Traffic infrastructure is not amajor concern for buyers at the moment as Vietnam’s infrastructure rank was upfrom 93 in the 2015-16 ranking of the World Economic Forum to 89 in 2016-17.-VNA
VNA
