Due to rapid urbanization and growth of passenger vehicle sales, Vietnam Automotive Aftermarket Service Industry is expected to grow at a CAGR of ~8.4% between 2020 and 2025: Ken Research
- Increased awareness on health and hygiene in the post COVID-19 scenario has acted as a catalyst for the demand of private vehicles, which contributes to the aftermarket services industry.
- Rapid urbanization couple with fast growing middle class section is another major growth driver in the market as it has led to higher disposable income and in turn shift in preference from two wheelers to four wheelers.
- Low localization rate and increased dependency on imports for components and spare parts acts as a challenge in the aftermarket industry
Increasing Car Ownership and Reduction of Import Tax: Vietnamese government has proposed various regulations since FY’18 to improve the ecosystem of the automotive industry and making it to convenient for the consumers to purchase private vehicles by reducing the import tax to 0% for cars imported from ASEAN region, which brings down the price of the final product. Government initiatives to strengthen Vietnam’s road infrastructure along with the increased awareness on health and hygiene brought about by the advent of COVID-19 is expected to increase the prospect of vehicle ownership in the future. There has been a gradual surge in vehicle parcs in recent times, expanding at a CAGR of ~25.7% in between FY’15 and FY’20. Growth of car ownership in Vietnam stood at ~10.5% in FY’20, which was comparatively higher than its South East Asian counterparts. Increasing car ownership acts as catalyst for the aftermarket services industry which is expected to grow at a significant rate in coming years.
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Rapid Urbanization and Fast Growing Middle Class: Rapid urbanization over the years is contributing to the growth of automotive market in Vietnam, as more and more consumers are migrating to urban cities. It is estimated that in FY’20, the urbanization rate stood at ~37.3% of its overall population compared to ~36.6% rate in FY’19. Urbanization serves as one of the growth drivers for the aftermarket service industry as consumers migrate for better payment opportunity in the cities, it allows them to have the financial means to avail private transport thereby increasing the prospect of aftermarket services. To curb excessive traffic jams in the cities, Hanoi, a major city in the Northern Region of Vietnam has proposed to ban motorcycles by 2030, thereby enhancing the opportunity of passenger vehicle sales for the country’s fast growing middle class in coming years.
Enhancing Online Ecosystem: Aftermarket service companies in Vietnam has not been able to adapt to the growing significance of the online ecosystem over the years. However, the advent of COVID-19 has changed the perception of consumers towards the utilization of online space. More consumers are utilizing digital medium for buying and selling products as well as booking services through online medium. Similarly, there exist a shift in aftermarket service industry wherein consumers are preferring to book slots for their vehicle services online. Therefore, the automotive aftermarket service and spare parts companies are expanding their presence in the online space for better visibility among consumers and compete on the basis of brand integration. Servicing companies have initiated the process of online booking to enhance customer’s convenience. This also helps the servicing companies to maintain COVID protocols such as curb in overcrowding in public places as set by the Vietnamese government.
Increased Awareness on Health and Hygiene: With the advent of COVID-19, consumers were witnessed to be more concerned on maintaining personal health and hygiene. Therefore they are preferring the option of private transportation rather than availing public transport system. The change in consumer’s behavior and preference is expected to act as an opportunity for the automotive aftermarket service industry in Vietnam. As more and more consumers prefer availing private transportation medium, the demand for new cars would surge in the coming years. With the surge in the vehicle parc, consumers would also require to periodically maintain their vehicle every 18 months as prescribed by the government of Vietnam, thereby the demand for aftermarket services would enhance. Therefore the future prospect of the industry looks strong wherein OEM and multi brand workshops in the market could utilize this opportunity to integrate the domain.
Integration of Electric Vehicles: In order to curb the rising impact of climate change, governments all over the world have pledged to reach zero net carbon emissions by 2050. Hence, there is a greater deliberation of replacing fuel operated vehicles with electric vehicles (EVs) to minimise pollution. “National Automobile Development Strategy by 2025” adopted by the Vietnamese government aims to stimulate manufacturing and increase the volume of use of EVs in the coming years. With the integration of EVs in the market, vehicle service companies will have to update their equipment's and train their mechanics for servicing electric cars which would require huge investment by these companies thus, impacting their business financials. Unorganized workshops will face challenge in servicing EVs as they operate on lower budget than required to cater to the demand of EV ecosystem.
Lack of Technological Adoption and Dependence on Imports: Domestic automotive and aftermarket services industry has not been able to invest in core and high end technology products such as transmission system. Localized parts required for vehicle servicing and production are mostly of low technology products such as tires, mirrors, glasses, batteries and plastic products. Therefore, aftermarket services industry in Vietnam remains largely dependent on imported components and spare parts, which increases their cost of operating their business.
The report titled “Vietnam Automotive Aftermarket: OEM, Multi-brand Outlet Services and the Spare Parts Market - Outlook to 2025: Driven by Rapid Urbanization and Growth of Vehicle Sales; fueled by Fast Growing Middle Class population and the growing preference for private vehicles in the post-COVID scenario” by Ken Research suggested that the automotive aftermarket service industry in Vietnam is expected to grow further in the near future, with the surge in vehicle parc due to increased awareness on health and hygiene followed by the aftermath of COVID-19, thus showcasing a change in consumer preference from availing public transport to private transportation medium. As more consumers shift from availing motorbikes which has historically been the dominant form of transportation in Vietnam to availing four wheeler vehicles, the demand for aftermarket services would increase in coming years. Rapid urbanization coupled with fast growing middle class would act as major growth drivers for the aftermarket service industry in Vietnam. The market is expected to register a positive CAGR of 8% in terms of revenue during the forecast period of FY’20-FY’25E.
Key Segments Covered in Vietnam Automotive Aftermarket Service Industry:-
By Type of Workshop
- OEM/Authorized
- Large Multi Brand
- Small/Unorganized
By Type of Vehicle Serviced
- Sedan
- SUV
- Hatchback
- Compact SUV
- MPV
By Age of Car
- 0-3 years
- 3-6 years
- 6-9 years
- 9 years & above
By Region
- North
- Central
- South
By Booking Mode
Online
Offline (including telephonic as well as Physical Booking)
By Service Split
- Maintenance
- Car Care
- Accident Repair
Vietnam Spare Parts Aftermarket Segmentation
By Type of Spare Parts
- Tires
- Battery
- Shocks & Struts
- Oil & Lubricants
- Drain Plug Gasket
- Alternator & Starter
- Others
Key Target Audience:-
- Automotive Companies
- OEM Vehicle Service Companies
- Multi Brand Vehicle Service Companies
- Automotive Spare Parts Companies
- Government Bodies
- Automotive Associations
Time Period Captured in the Report:-
- Historical Period: 2015-2020
- Forecast Period: 2020-2025
Automotive Aftermarket Service Companies in Vietnam:-
OEM/Authorized Vehicle Service Companies
- Hyundai Vietnam
- Toyota Motors Vietnam
- Honda Vietnam
- Mitsubishi Vietnam
- Ford Vietnam
- Suzuki Vietnam
- Vinfast
- Lexus
- THACO
Multi Brand Vehicle Service Companies
- Vietnam Car Care
- Thanh Phong Auto
- Vuong Phat Auto
- Garage Doanh Workshop
- Thanh Tam Auto
- Vu Khoi Garage
- Pham Vu
- Ngyuen Khoi
- Liem Gia Phat
- Spare Part Suppliers
- Denso
- Yazaki
- Sumitomo Electric
- Toyota Boshoku
- Harada
- Hanoi Plastics
- Casumina
- Kumho Tires
- Estec
- Pinaco
- Tam Hop
Key Topics Covered in the Report:-
- Vietnam Automotive Aftermarket Service Industry Overview
- Value Chain Analysis of Vietnam Automotive Aftermarket Service Industry
- Ecosystem of Major Entities of Vietnam Automotive Aftermarket Service Industry
- Market Size of Vietnam Automotive Aftermarket Service Industry on the basis of Revenue and Number of Vehicles Serviced, FY’15-FY’20
- Passenger Vehicle Sales in Vietnam, FY’15-FY’20
- Vehicle Parc in Vietnam, FY’15-FY’20
- Vietnam Automotive Aftermarket Service Industry Segmentation, FY’20
- Competitive Analysis of Vietnam Automotive Aftermarket
- Competition in Vietnam OEM Automotive Aftermarket Service Industry
- Competition in Vietnam Multi Brand Automotive Aftermarket Service Industry
- Company Profiles of Hyundai, Toyoto Motors, Vinfast, Mitsubishi Motors, Honda, Vietnam Car Care, Thanh Phong Auto, Vuong Phat Auto, Garage Doanh Workshop and Thanh Tam Auto
- Pricing of Major OEM Automotive Service Companies
- Pricing of Major Multi Brand Automotive Service Companies
- Trends and Developments in Vietnam Automotive Aftermarket Service Industry
- Issues and Challenges in Vietnam Automotive Aftermarket Service Industry
- Porter 5 Forces Analysis of Vietnam’s Automotive Aftermarket Service Industry
- Government Regulations in Vietnam Automotive Aftermarket Service Industry
Key Decision Making Parameters for Automobile Servicing: OEM and Multi Brand Vehicle Servicing Companies
- Technology Platforms used by OEM and Multi Brand Vehicle Service Companies
- Analysis of Multi Brand and OEM Workshops in Vietnam
- Operating Model of Multi Brand Workshops in Vietnam
- Operating Model of OEM Workshops in Vietnam
- Pain Points in the OEM and Multi Brand Aftermarket Industry
- Opportunities in the OEM and Multi Brand Aftermarket Industry
- Spare Parts Landscape in Vietnam
- Market Size of Spare Parts Aftermarket Industry and Classification by Different Type of Spare Parts
- Ecosystem by Different Type of Spare Parts and Consumables Market in Vietnam
- Impact of COVID in the Vietnam Automotive and Aftermarket Industry
- Future Market Size of Vietnam Automotive Aftermarket Service Industry on the basis of Revenue and Number of Vehicles Serviced, FY’20-FY’25E
- Future Outlook and Segmentations for Vietnam Automotive Aftermarket Service Industry, FY’20-FY’25E
- Analyst Recommendation
For More Information on the research report, refer to below link:-
Vietnam Automotive Aftermarket Service Market
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