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Business Times
4 minutes ago
- Automotive
- Business Times
Tariff free or not, US cars could find less takers in Vietnam's roads
[HO CHI MINH CITY] Tariff-free or not, American sport utility vehicles (SUVs) face a tough road in Vietnam where nearly half of all auto sales go to SUVs, as buyers are likely to still favour leaner, fuel-efficient Japanese and Korean models over the bulky and gas-guzzling US rides. In addition, electric vehicle (EV) manufacturers such as home-grown firm VinFast and some Chinese players are gaining an upper hand in Vietnam, bolstered by recent domestic policies that will restrict fossil fuel-powered vehicles in major urban traffic routes in the coming years. So while US President Donald Trump may tout the SUV as a 'wonderful addition' to US exports to Vietnam, following a bilateral trade pact struck earlier this month, road realities suggest it may do little to drive demand for these large-engine vehicles shipped from halfway around the world. Koketso Tsoai, automobiles analyst at BMI, said: 'US brands would still face limits to their market share due to persistent non-tariff barriers, weaker after-sales networks, consumer concerns about maintenance, and the strong presence of local and Chinese brands in the entry and mid-range SUV segments.' The large engine vehicle that 'does so well in the US', as Trump noted on his Truth Social post announcing the trade deal with Hanoi on Jul 2, has little traction in Vietnam, where drivers often navigate dense traffic and narrow streets ill-suited for bulky SUVs. 'American SUVs are often oversized for Vietnam's roads and infrastructure, which are not built to accommodate vehicles of that size,' said Nguyen Phuc Lam, chief executive at Sencar Mobility, a car-sharing service provider in Vietnam. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up 'For EV brands like Tesla, the limited charging infrastructure remains a major obstacle,' he added. Who rules the road? Based on a report by Asian Automotive Analysis, Vietnam's total auto sales surpassed 450,000 units last year, marking an 18.8 per cent increase from the previous year. SUVs accounted for 46 per cent of the total. Vietnam's total car sales lag behind regional peers such as Indonesia, Malaysia and Thailand, and its streets are still dominated by motorbikes rather than cars. As at end-2024, the country had 77 million registered motorcycles – roughly 11 for every one of the country's 6.8 million registered cars, according to the Vietnam Register. Motorbikes make up more than 90 per cent of all registered vehicles in Vietnam. PHOTO: AFP Yet the country is becoming increasingly attractive to global automakers wanting to expand, thanks to a growing middle class, low car ownership rates and recent curbs on gasoline-powered motorbikes. Nguyen Quoc Binh, administrator of an online community for Vietnamese car lovers with nearly 1.6 million members in its Facebook group, noted that some of the largest models favoured by Vietnamese drivers include Japan's Toyota Land Cruiser and Lexus LX600, both well-suited to local road conditions. 'American SUVs are often too bulky and fuel-slurping. Even though a few are not overly expensive, people are generally not that interested in them,' Binh stated. Furthermore, he noted that US-made cars entering Vietnam still face a multi-layered cost structure, including special consumption taxes and logistics fees. Even with import tariffs fully scrapped, retail prices would only fall by about 15 to 20 per cent; this is unlikely a game-changer for car buyers willing to splurge on niche, premium models. Customising to local market preferences is key, Binh said, pointing to several Ford pickup models with smaller engines that are assembled in Vietnam and priced competitively against some Japanese rivals. 'Their smaller models are well-built and continuously updated to match local consumer preferences, which is why Ford achieved quite impressive sales,' he said. Backed by its local factory, which has been operating for nearly three decades, Ford is currently the only US car manufacturer to have secured a significant market share in Vietnam, selling more than 42,000 units in 2024. However, its sales still trail behind domestic manufacturer VinFast, South Korea's Hyundai and Japan's Toyota. Binh believes that certain mid-range Ford models produced in the US with engine capacities below 3,000 cc could benefit from the tax cut from 50 per cent to zero as several dealers have indicated they are ready to import these vehicles to offer more competitive options to customers. But such small additions are unlikely to significantly shift the automotive landscape in Vietnam. Overall, US brands struggle to compete in the compact car segment, dominated by Toyota and Hyundai, and in the EV market, where VinFast holds a clear advantage, said Chris Liu, senior automotive analyst at global technology advisory group Omdia. Fight against pollution As part of a sweeping initiative to combat worsening air pollution, Prime Minister Pham Minh Chinh has ordered Hanoi to ban all fossil fuel-powered motorbikes and mopeds from Hanoi's downtown Ring Road 1 – an inner urban beltway – starting Jul 1 next year. The restriction will expand in 2028 to include private gasoline-powered cars within both Ring Roads 1 and 2. Meanwhile, Ho Chi Minh City is also considering similar restrictions in areas facing high pollution. Such policies are expected to benefit VinFast, which currently holds a leading position in Vietnam's EV and motorbike market. The VF3, a mini electric SUV produced by VinFast, was Vietnam's top-selling car model in the first half of 2025, with sales exceeding 23,000 units. PHOTO: VINFAST Lacking economies of scale Aside from Ford, US carmakers are also unlikely to establish local production facilities in Vietnam to compete more effectively, as limited sales volumes do not justify such investments in the short term. More established automotive hubs in Asean can also serve as re-export centres to Vietnam without incurring import duties, making local production even less attractive. 'Vietnam's market is fragmented; even top models sell only 10,000-15,000 units per year,' said Akshay Prasad, principal of automotive practice in South-east Asia at global management consulting firm Arthur D Little. 'Setting up facilities, whether for fully knocked-down or semi-knockdown vehicles, requires US$50-100 million investment, (which is) hard to justify without regional scale.' The most notable failure was the withdrawal of General Motors' Chevrolet from Vietnam in 2018, when it transferred local operations to VinFast. It later exited other South-east Asian markets as well, largely due to poor sales and unprofitable operations. A media statement regarding the US carmaker's exit from Indonesia in 2020 offered insight into its rationale: to 'focus on markets where there is a clear pathway to sustainable profitability'. In addition, US brands such as Ford also already source from neighbouring Thailand to enjoy duty-free access to Vietnam under the Asean Trade in Goods Agreement. European Union-origin cars are also benefiting from phased tariff cuts to zero by 2030, thanks to the EU-Vietnam Free Trade Agreement (EVFTA). 'In terms of building export-oriented plants, the (previous) lack of a US-Vietnam free trade agreement makes the country less competitive than Korea or Mexico,' Omdia's Liu noted. 'However, auto parts stand out as a bright spot, with Vietnam becoming a credible hub for labour-intensive component making,' he added.
Business Times
4 minutes ago
- Business
- Business Times
Indonesia battles oil production slump with bold new drilling plans
[JAKARTA] Indonesia is banking on 75 newly offered oil and gas blocks to stem its declining domestic output, but analysts warn that the boost may be short-lived unless deeper investment and structural reforms follow. The government hopes the expanded portfolio will help lift production to 605,000 barrels a day this year and eventually reach its longstanding target of one million barrels by 2030. But with more than half of Indonesia's crude oil needs already met through imports and demand still rising, the stakes are high if these new blocks fail to deliver. Prateek Pandey, senior vice-president and head of Asia-Pacific oil and gas analysis at Rystad Energy, said that Indonesia's target, while ambitious, is not out of reach if the right pieces fall into place. 'Production upside brings a short-term momentum. But the real challenge isn't reaching 605,000 barrels; it's sustaining it,' he told The Business Times. New blocks to drill Of the 75 blocks offered, 61 are currently open for bidding. These include resource-rich but underexplored areas such as Seram-Aru and Cenderawasih Bay II and III in the Maluku and Papua regions, which officials hope will attract long-term investment and help diversify the national production base beyond traditional oil and gas hubs. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up The government has also identified 14 more areas for future licensing rounds, including Bukit Barat, Halmahera-Kofiau, Semai IV, and Akimeugah. Deputy Minister of Energy and Mineral Resources Yuliot Tanjung said on Jul 8 that the blocks are being offered under production-sharing contracts (PSCs), which allow companies to recover their exploration and development costs before sharing profits with the government. Deputy Minister of Energy and Mineral Resources Yuliot Tanjung says the new blocks are being offered under production-sharing contracts. PHOTO: ELISA VALENTA, BT He added that some blocks already have winning bidders, while others remain open for bidding or are being prepared for future tenders. Rikky Rahmat Firdaus, deputy for exploration in the Upstream Oil and Gas Regulatory Task Force, said that Malaysia's Petronas and Total E&P Indonesie will begin exploration drilling next year in the Bobara Block, a 8,500 square kilometre oil field in Papua. Firdaus pointed out that Indonesia could see additional production this year from two oil and gas blocks, including state-owned energy firm Pertamina's existing assets such as ExxonMobil's Cepu Block, which may contribute around 30,000 barrels a day. Further gains are expected from newer fields such as Forel and Terubuk, which are projected to add another 20,000 barrels per day combined. Declining output Once a major oil producer, Indonesia has seen a steady decline in domestic output, leaving the country increasingly reliant on imports to meet its energy needs. In the 1990s, oil and gas production peaked at around 1.5 million barrels a day, but output has since dropped significantly. Komaidi Notonegoro, executive director of the Jakarta-based think tank ReforMiner Institute, said the country's upstream oil and gas industry has been grappling with increasingly complex challenges in recent years. He noted that a key concern is Indonesia's heavy reliance on ageing wells, with around 52 per cent of the output coming from mature fields nearing the end of their productive life. Reversing the downward trend in domestic output is no easy feat, said Komaidi, as it requires balancing the economic viability of upstream projects with the government's fiscal limitations, a delicate act of walking a tightrope between industry needs and state finances. 'In general, managing oil and gas fields in the mature phase requires special treatment, as production and maintenance costs tend to rise while output continues to decline,' he noted. Pandey from Rystad Energy said that most of Indonesia's recent oil and gas block awards have reverted to the cost-recovery PSC model, marking a shift away from the gross split scheme introduced in 2017. The cost-recovery model is seen as more appealing in today's uncertain market. 'While fiscal terms are generally not seen as a major obstacle, above-ground risks and domestic-market dynamics continue to weigh heavily on the commercial viability of projects,' he said, pointing to investor caution amid unstable Brent prices in 2025. Operators, he added, are becoming increasingly hesitant to invest in both brownfield developments and high-risk exploration. Energy security Indonesian President Prabowo Subianto has placed energy security at the heart of his economic agenda, vowing to reduce import dependence and ramp up domestic oil production. The push is not only about securing supply, but also about curbing rising energy import bills and easing long-term fiscal pressures. Indonesia's fuel subsidy amounted to 500 trillion rupiah (S$39.4 billion) last year. The country currently consumes around 1.6 million barrels of oil a day, with domestic production accounting for only 600,000 barrels, while the remaining one million barrels are met through imports. Dr Yayan Satyakti, a lecturer and researcher at Padjadjaran University, warned that the growing gap between domestic supply and demand would not only erode energy resilience but also carry broader economic, fiscal, and geopolitical consequences for Indonesia. 'Higher energy imports mean more spending in foreign currency, potentially worsening Indonesia's current account balance and putting pressure on the rupiah,' Dr Yayan said. Pandey noted that, amid rising geopolitical tensions that could fuel energy price volatility, countries around the world are re-evaluating their domestic oil and gas potential and Indonesia is no exception. The South-east Asian nation is also seeking to buy more crude oil from the US, part of its broader negotiation with Washington to lower the 32 per cent import tariff that is still under review. While this effort will remain relevant, domestic potential is likely to take priority, said Pandey.
Reuters
5 minutes ago
- Business
- Reuters
Indian equity benchmarks flat as fall in HCL Technologies offsets broader gains
July 15 (Reuters) - India's equity benchmarks opened little changed on Tuesday as losses in HCL Technologies following its quarterly results offset gains in other sectors. The Nifty 50 (.NSEI), opens new tab was up 0.03% at 25,089.5 points, while the BSE Sensex (.BSESN), opens new tab lost 0.02% to 82,233.16, as of 9:15 a.m. IST. HCL Technologies ( opens new tab fell 1.8%, and was the worst hit among the Nifty 50 stocks, after it posted lower-than-expected profit for the first quarter due to margin pressure even as its revenues beat estimate. Nine of the 13 sectors advanced at open, with the lower-than-expected domestic inflation data aiding sentiment.
Toronto Star
5 minutes ago
- Politics
- Toronto Star
Mike Waltz to face grilling over Signal chat at Senate hearing for UN role
UNITED NATIONS (AP) — Mike Waltz, President Donald Trump's nominee for U.S. ambassador to the United Nations, will face questioning from lawmakers Tuesday for the first time since he was ousted as national security adviser in the weeks after he mistakenly added a journalist to a private Signal chat used to discuss sensitive military plans.
Toronto Star
5 minutes ago
- Toronto Star
Colorado prosecutors to lay out evidence in firebomb attack on demonstration for Israeli hostages
DENVER (AP) — Colorado prosecutors are set to lay out their evidence Tuesday against a man charged with murder, attempted murder and other crimes in a firebomb attack on demonstrators showing their support for Israeli hostages in Gaza. Investigators say Mohamed Sabry Soliman told them he intended to kill the roughly 20 participants at the weekly demonstration on Boulder's Pearl Street pedestrian mall on June 1. But he threw just two of more than two dozen Molotov cocktails he had with him while yelling, 'Free Palestine!' Police said he told them he got scared because he had never hurt anyone before.
