VietNamNet Bridge – The newly-issued Circular 20, which is thought to kill private car dealers and bring benefits to authorized automobile importers, turns out to be not welcomed by the authorized importers.

Authorized importers: we can’t corner the market as people think

Right after the Circular 20 was issued, private car dealers voiced their concern that they would have to shut down business because of the overly complicated procedures. If so, the car market would be dominated by authorized importers, who would control the market and raise the prices to the levels they want.

As predicted by the car dealers, the legal document has been applauded by many authorized automobile dealers, especially when Deputy Minister of Industry and Trade, Nguyen Thanh Bien said this is a measure to make the domestic automobile market healthier, not to restrict trade.

Le Ngoc Duc, General Director of Hyundai Thanh Cong Company, has denied the opinion that authorized importers would be able to easily raise the sale prices and capture the market.

“All price increases must be accepted by the market when we have convincing reasons, like the exchange rate fluctuations or higher input material prices,” he said. “Not everything we want can become the truth”.

Since June 2009, Hyundai Thanh Cong has become the exclusive distributor of South Korean Hyundai brand vehicles in Vietnam. These vehicles have also been traded by many unauthorized dealers.

“Private car dealers think that we can capture the market, because they do not have the opportunity to work face to face with the manufacturer,” he explained. “Their partners are also trade companies, and Vietnamese dealers have the power to set up the sale prices themselves because they have no tie with the manufacturer”.

Meanwhile, authorized importers like Hyundai Thanh Cong have to follow the strict regulations of the global manufacturer. Duc said, every time when Hyundai Thanh Cong plans to adjust the sale prices, it has to send report to the manufacturer in South Korea. In general, global automobile manufacturers always follow the mechanisms which control distributors in different countries in order to ensure that their market strategy goes on the right track.

Especially, distributors in countries must obey the regulations on market zoning of the groups: every distributor is in charge of a certain market area. According to Duc, recently, a Vietnamese private car dealer imported tens of Tucsons from Hyundai Taiwan. After that, Hyundai Taiwan was imposed a fine because it violated the regulations on market zoning.

Duc believes that by requiring more legal documents, the state management agencies aim to re-establish the order on the car market. By buying cars from authorized importers, consumers will get better post-sale services and guaranteed quality

It’ll take time to follow required formalities

Many other authorized importers say do not think the new regulation is the good news. Even the members of the Vietnam Automobile Manufacturers’ Association VAMA have been split with two contradictory opinions. Some applaud the new decision, while the others believe that the circular has created unnecessary barriers.

Currently, some of VAMA’s automobile manufacturers also have the function of importing cars for domestic consumption, including Toyota, Ford, Suzuki, Isuzu, Mercedes-Benz Vietnam. When saying “cars imported by Toyota”, people would understand that Toyota Vietnam distributes cars for the “parent company”.

However, with Circular 20, automobile companies in Vietnam will have to prove that they are the authorized importers. For example, Toyota Vietnam will have to prove that it distributes cars made by Toyota Japan when importing cars.

Meanwhile, VAMA’s experts have pointed out that some provisions of the new circular are not clear enough. There are many kinds of legal documents stipulated by the circular have not been existing in the real transactions between companies.

“Importing cars is not the main business of the joint ventures belonging to VAMA. Now, as they are required to present more legal documents, the import will get more complicated,” an expert said.

Pham Huyen