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Vietnam Has World's Second Fastest Growing Car Market

A recent report named Vietnam the second fastest growing car market in the world in 2016.

According to a study by the UK-based market analysis firm JATO, the Vietnamese automobile market grew by 27.1% last year, second only to Singapore, VietnamNet reports.

Out of 84.24 million cars sold worldwide in 2016, 228,478 were purchased in Vietnam, ranking just 34th in total sales. However, the growth from 2015 was substantial.

Imports are heavily favored by Vietnamese car buyers, especially those from Thailand. According to the General Department of Customs, in January 2,600 CBU (complete built unit) vehicles were imported from Thailand, accounting for 80% of total CBU imports.

South Korea, India and China are also popular import countries, the news source shares.

One reason why Thailand has become such a major supplier of cars in Vietnam is a steady reduction of tariffs. Under the ASEAN Trade in Goods Agreement (ATIGA), all tariffs placed on CBU imports from ASEAN countries will be eliminated by 2018. Tariffs were cut 30% from the 2016 level on January 1, 2017.

As a result, domestically produced cars have become less competitive in terms of pricing, and local automobile firms are focusing on selling imported vehicles instead of continuing to assemble cars, VietnamNet reports.

After 2016's banner year, sales from within ASEAN are booming thus far in 2017. In January, the number of cars with nine or fewer seats imported from within the economic bloc increase by a remarkable 234% compared to the same period last year.

[Photo via Xe Cong Nghe]

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