COVID-19 to have huge impact on automotive industry - Illustrative image (Source: VNA) Hanoi (VNA) – Thespread of the COVID-19 pandemic in almost all countries and territoriesworldwide is likely to force automobile manufacturing and assembly firms inVietnam to scale down operations and even close their factories.
In a document assessing the pandemic’s impacts on theVietnamese automotive industry sent to the Ministries of Industry and Trade,Finance, and Transport, Chairman of the Vietnam Automobile ManufacturersAssociation (VAMA) Toru Kinoshita said that at present imports of spare partscan still meet production demands.
However, many spare part and vehicle manufacturers will bedirectly affected by many countries’ decision to lock down one or more areasand even the entire nation to deal with COVID-19.
This will mean many enterprises will have to adjust theirproduction plans, and even consider closing their factories temporarily untilan alternative supply is found. As a result, thousands of direct and indirectworkers will be laid off, or have their salaries cut, Kinoshita predicted.
The VAMA representative also affirmed that at present, thepandemic has not had any significant impact on production and businessactivities. However, the possibility that the disease continues could meanwhole companies could be isolated to contain the epidemic, posing the risk ofbusinesses shutting down.
At the same time, many automobile manufacturers investing inexpanding their factories face difficulties as some of their machinery andequipment cannot be imported into Vietnam. Meanwhile, many foreign engineers,experts and skilled workers are unable to enter Vietnam or are in quarantine.
Some enterprises said that their spare parts inventories areonly enough to last a short time because it will take a few months to resume imports.If the disease continues developing and supply is affected, enterprises will beforced to temporarily suspend production and delay their business plans.
In addition, the VAMA Chairman said that the decrease intravel and goods transportation demands will lead to a decline in demand forvehicles.
The number of customers has decreased, resulting in areduction in the number of new contracts. Therefore, sales on the Vietnameseautomotive market in 2020 are forecast to drop by more than 15 percent comparedwith the previous year.
In terms of services, VAMA said that the number of vehiclesusing repair services has fallen by 30-40 percent, and is expected to fall by60-70 percent if the pandemic worsens.
In this context, VAMA proposed the Government considerrelaxing and reducing taxes for businesses to help maintain production andstimulate consumption.
It proposed cutting 50 percent of value added tax and 50 percentof registration fees for car buyers, extending the payment of value added taxand special consumption tax for businesses from March to September 2020,suspending the payment of Corporate Income Tax in 2020 to March 31, 2021, andextending the time for paying taxes at import stage in 2020.
The association also suggested the Government study and issuea general stimulus package for economic development, and extend commercial loanpackages so that enterprises have time to recover production and business andpay debts./.
VNA
