Fierce Auto Rivalry Produces Superb Cars |
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Anthony Fontanelle
December 6, 2007
Look around, the roads are getting crammed with remarkable vehicles, thanks to the fierce auto competition.
BMW, Hyundai, Kia, Porsche and other automakers have been using their edge to pull more shoppers. The competition is getting stiffer and stiffer. And automakers are resorting to different tactics to win over customers. But the best tactic is producing cutting-edge product lines.
One of the tactics employed by distributors to wipe out rivals is providing actual prices of cars to customs agencies. Usually, auto distributors declare prices lower than the actual prices in order to evade tax. Meanwhile, the actual prices provided by these distributors are much higher than the levels declared by car dealers. For example, previously, customs agencies defined the taxable value of a BMW X5 3.0 at US$30,000, while Euro Auto, the distributor for BMW, declared the price at US$50,000, Vietnam News reported.
BMW and Porsche have been working hand in hand with Vietnamese customs agencies by providing actual prices as well as technical assistance. If customs agencies have doubts about the values car trading companies are declaring, they send the VIN number to the two manufacturers for checking. All necessary information will be provided by the manufacturers, the report continued.
The measures applied by official auto distributors have shown their efficiency. A representative of a Hai Phong-based car trading company intimated that since Euro Auto arrived, the number of X5 cars imported by dealers had dropped sharply since the latter could no longer evade tax.
Good post-sales services are the second measure the authorized distributors are using to lure clients, since this is the weakest point of trading companies.
Manufacturers are using different measures to control the market and limit the number of cars which are not sold by them. Though applying the global maintenance policy, Porsche still collects maintenance fees from the products which are not officially distributed in Vietnam.
Some manufacturers accept giving maintenance to all models of cars, but use a dual price for auto parts. The buyers that do not purchase vehicles from authorized distributors will be obliged to pay at retail prices, much higher than those applied for manufacturers’ clients.
Usually, the cars imported by car trading companies always face technical problems as the cars are not localized to conditions in Vietnam. Euro Auto said that the BMW imported from the US were not designed for running in hot weather. The air conditioner engineered for the cars to run in Vietnam, however, is always larger than in the Porsche cars imported from the United States.
Automakers such as Hyundai, Porsche and BMW do not intend to assemble cars in Vietnam. Truong Hai, however, is planning to assemble Kia Morning.
Car traders may face bigger challenges once local auto joint ventures can get the right to distribute ready made cars. By that time, Toyota will control the sales of Lexus, one of the most favored brand names, Honda will ‘hold’ Acura, Mercedes will distribute its cars. The maker of the Acura car antenna has a good niche though.
But analysts say that dealerships will still exist as authorized distributors also have their weak points. The distributors can only offer for sale the models automakers allow and at limited volume, while trading companies can import any product they want.
Source: Amazines.com