Vietnam agricultural machinery maker profits from car sales

Viet Capital Securities JSC (VCSC) says VEAM posted VND3.3 trillion ($140 million) in consolidated net profit after tax and minority interests (NPAT-MI) in the first half of this year, up 51 percent year-on-year.

The profit surge was mainly driven by shared profits from automobile associate companies including Honda, Toyota and Ford Vietnam.

VCSC attributed VEAM’s impressive performance to a significant boost in Honda motorbike sales, forecast-beating profit margins with automobile associates, and smaller-than-expected losses from core businesses.

It said Honda’s motorbike sales volume jumped by double-digits year-on-year in the first half of 2018, further entrenching its dominance in the local market.

Honda’s share of Vietnam’s motorbike market soared from 72.5 percent in 2017 to 77 percent in 2018’s second quarter on the back of its dominance in the fast-growing scooter segment, top-brand positioning and extensive distribution network.

Honda motorbike sales is tracking ahead of the projection set for the whole of 2018, which is a 4.5 percent increase against 2017.

Meanwhile, the Japanese auto giant’s passenger car sales rocketed 106 percent year-on-year to 11,181 units in the first half of this year. The company also posted significant growth in several models including Honda City (sedan B), Honda Civic (sedan C) and Honda CRV (crossover).

Of particular note is that Honda CRV took advantage of stalled imports of sport utility vehicles (SUV) Toyota Fortuner to surge 173 percent year-on-year in the first half to 4,076 units.

Honda car sales were also bolstered by the launch of a hatchback model, Honda Jazz. Honda accounted for 10 percent of the passenger car market in the first half of this year.

According to VCSC, the stalled imports of its Fortuner model hurt Toyota’s passenger car sales, but this was partly cushioned by strong higher-margin sales of completely knocked down (CKD) units.

With Decree 116 on CBU imports into Vietnam catching Toyota off guard, its passenger car sales sank 13 percent year-on-year in the first half. The sale of CBUs plunged 97 percent to 263 units while that of CKDs soared 30 percent to 25,487 units.

Toyota’s estimated passenger car market share of 23 percent was a six percent drop over the 29 percent it had in the first half of 2017.

VCSC analysts said Ford was a laggard in the passenger car market because of limited product offerings amidst tougher competition from other brands.