Mitsubishi Motors Thailand is optimistic about its car shipments to Vietnam after the two countries resolved to tackle obstacles posed by Vietnam's non-tariff barriers.
Since early 2018, carmakers in Thailand have put off shipments to Vietnam after the latter country tightened regulations by inspecting all imported cars at the port of entry, resulting in a longer clearing process of 30-45 days for delivery to local buyers, compared with 3-4 days in the past.
The regulation was issued after Vietnam had announced an exemption from import duty for cars under the Asean Free Trade Area last October.
Earlier this month, Thailand and Vietnam agreed in principle to push forward a mutual recognition agreement (MRA) on automotive standards. Vietnamese officials vowed to forward the proposal to its transport authorities.
Thailand has many agencies to test imported completely built-up (CBU) cars under the MRA. The standards should help shorten the delivery process, as there is no need for repeated testing at Vietnamese ports.
Mitsubishi resumed exports to Vietnam in June with the shipment of 1,900 units of three Thai-made models: Triton, Attrage and Mirage.
"We feel hopeful about this development between two governments that will allow us to beef up export volume to Vietnam in the near future," said Morikazu Chokki, president and chief executive of Mitsubishi Motors Thailand.
Although CBU shipments to Vietnam represent a small volume, Mitsubishi's manufacturing facilities in Chon Buri have to handle all exports across Asean.
Last year, Mitsubishi exported 5,700 CBU cars to Vietnam.
Some Indonesian-made cars will soon be shipped to Vietnam in the next few months as the parent firm continues to monitor the situation, Mr Chokki said.
"Currently, Mitsubishi's plant in Indonesia still has the small shipment volume," he said.
Moreover, Mr Chokki expressed concern about the trade spat led by the US and China.
"Thailand will be indirectly affected in export terms, and Mitsubishi cannot predict any US policies to be issued under these circumstances," he said. "Thailand, with its surplus balance of trade, is also being watched closely by the US."
There is also the worrying issue of a soon-to-be-imposed 25% duty on all CBU cars shipped to the US. Mitsubishi exports the Mirage and the Attrage to that country.
In 2017, Mitsubishi exported 18,700 cars to the US. The current US duty is 25% for pickup trucks, but just 2.5% for passenger cars.
In related news, Mitsubishi introduced the Indonesia-made Xpander SUV in the Thai market, expecting to sell 1,000 cars per month.
The Bekasi plant makes the Xpander for Asean countries with a planned capacity of 120,000 units in 2018 and 150,000 units in 2019.
Mitsubishi runs manufacturing plants with annual capacity of 424,000 cars in Thailand, 160,000 in Indonesia and 50,000 in the Philippines.
Mr Chokki said facilities in Thailand will make the new SUV in the future.