Vietnam is returning to pre-pandemic levels of lubricant consumption, an industry insider said, boosted by strong growth in automotive production and sales volume, along with improved financial performance by textile companies because of a free trade agreement with the European Union.
Vietnam was amongst the few countries to show positive economic growth in 2020, thanks to its effective efforts to alleviate the financial impacts of lockdowns related to the COVID-19 pandemic, Khanh Ngo, senior consultant at Ipsos Strategy3, told Lube Report. The company forecasts that Vietnam is heading back toward its pre-pandemic lubricant consumption annual growth rate, Ngo said. Before the pandemic, the company forecasted the country’s lubricant consumption rate to grow at about a 7-8% compound annual rate from 2018 to 2022.
According to Ngo, signals of strong recovery for the manufacturing sector – as well as lubricant consumption – are the introduction of COVID-19 vaccines, the behavior of Vietnamese consumers that show positivity in terms of income recovery and overall economy and the European Union Vietnam Free Trade Agreement, which has showed some positive influences for local enterprises. For example, some listed textiles export companies and textiles raw materials companies report 50% to 100% increases in stock price in the last quarter, he noted. The free trade agreement aims to eliminate almost all tariffs in 10 years effective Aug 1. this year.
Vietnam’s sales of motor vehicles jumped 14.9% year on year in October, according to statistics from the Asean Automotive Federation. Motor vehicle production has been increasing at double-digit rates, year on year since July – by 10.8% in July, 43.9% in August, 26.6% in September and by 13.7% in October.
“Passenger vehicle sales rose by double digits for the second consecutive month,” an increase of 11% year on year in September and 19% year on year in October, according to an LMC Automotive report, “while light commercial vehicle sales were back in positive territory in October and increased 2% year-on-year, posting the first year-on-year upturn since February.”
LMC said that support came not only from the temporary cut in the registration fee for locally produced models, but also from strong gross domestic product growth in the third quarter, increasing 16.7% from the second quarter and up 2.6% year on year. That was thanks to positive foreign direct investment inflows and goods exports, the company noted. “Retail sales in Vietnam have made a V‐shaped recovery and have already returned to pre‐pandemic levels, driven by improved consumer confidence and spending,” LMC added. The International Monetary Fund GDP forecast for Vietnam in 2020 is 1.6% and for 2021 is 6.7%.