No longer a backwater country - Vietnam pip Thailand and Indonesia to host SEA launch of Civic Type R, world debut of Mitsubishi XFC Concept

Trade within the Southeast Asian region is promoted within the framework of the Association of Southeast Asian Nations (ASEAN), a trade bloc of sorts but minus the adoption of a common regulations. The ASEAN trade bloc is heavily influenced by 3 countries – Thailand, Indonesia, Malaysia – the so-called ASEAN Big-3.

Before Covid-19 pandemic and the associated parts shortage hit the world’s industries, Indonesia and Thailand were selling over a million cars (including commercial trucks and buses) each annually, followed by Malaysia’s circa 600,000 units.

Vietnam is a promising market, but its annual car sales is only around 320,000 units, less than even the Philippines’ 370,000 units. As such, not many car companies pay attention to Vietnam.

At least that was how the status quo was several years ago.

Today, Vietnam is on the verge of breaking out of its ‘backwater of ASEAN’ image to become an investment hot spot.

The decision by Mitsubishi Motors to choose Vietnam as the venue for the world debut of its XFC Concept, which previews the tri-diamond brand’s upcoming compact SUV (ASEAN region’s replacement model for the ASX) signals an increased focus into Vietnam.

Historically, Indonesia and Thailand have always been the preferred venue for world debuts of its core models – Thailand for the , Indonesia for the – reflecting the importance of the respective countries’ customers for these products.

Today, the Xpander is Vietnam’s No.1 selling car, with sales volume that is second only to Indonesia, so the team at Mitsubishi Motors Vietnam holds a lot of influence.

Although Vietnam’s 320,000 units per year car market is a lot less than Malaysia’s 600,000 units, that fact doesn’t mean anything to Mitsubishi Motors because of Malaysia’s new car market is closed off by Proton and Perodua.

Just look at Mitsubishi Motors Malaysia, which didn’t get to launch the new Xpander facelift that the team in Vietnam is already selling. Regardless, the Malaysian team is expected to still put up a valiant fight against the and with their ageing pre-facelift Xpander.

Xpander facelift is not available in Malaysia

But the bigger question is why Vietnam and not Thailand or Indonesia?

The answer is growth potential. Vietnam may be selling 3 times less new cars than Thailand or Indonesia, but its 98 million population is bigger than Thailand’s 70 million, and the median age for Vietnam is just slightly above 30 years old, versus Thailand’s low 40s.

Vietnam’s population is larger than Thailand, but with a lot lower car ownership, so growth potential is higher

Vietnam has also overtaken its ASEAN peers to become ASEAN’s fastest growing economy. The World Bank forecasts Vietnam’s economy to grow by 7 percent this year, the only Asian economy to buck slowing economic growth.

To car companies, all these data mean that Vietnam’s combination of low car ownership, young population, fast growing economy means that businesses are barely scrapping the surface of Vietnam’s market potential.

ASEAN debut of FL5 Civic Type R, note the bike image behind

Mitsubishi Motors is not the only company to increase its focus on Vietnam. Honda has since announced that it will choose Vietnam to be the first ASEAN country to launch its FL5 2023 .

Unlike the XFC Concept / ASX replacement SUV, the Civic Type R is not going to sell in large numbers, but the decision to select Vietnam to launch the Honda’s flagship performance car holds very strong symbolic value.

Vietnam is still a country that relies more on motorcycles than cars. Can you guess what’s the No.1 selling motorcycle brand in Vietnam? That’s right. Honda holds a shocking 80 percent of Vietnam’s motorcycle market.

As income levels grow, Honda wants to position itself to be their first choice for a car, and they want the Civic Type R halo car to create that aspirational value.

Did you know that Honda Vietnam is one of the few Honda distributors in the region to have a common website for both cars and motorcycles? Elsewhere, even in Indonesia, Honda’s motorcycle and car divisions are run separately, because it makes more sense that way but in Vietnam, there is a very strong conversion from Honda motorcycle owners to cars.

When a Vietnamese buyer is browsing for a Honda Wave 125 or a Winner X, Honda wants to remind them that they also have a Honda City waiting.

More than 10 years ago, Malaysia was Honda’s most important market in the region. In 2007, Malaysia became the first and only country to be allowed to sell the Japan-only FD2 Civic Type R. We were also the first in the region to launch the Honda CR-Z, and the first country outside of Japan to assemble Honda hybrids.

Nevermind ASEAN, Malaysia was the first and only country in the world to sell the FD2 Civic Type R – the last ‘JDM-only’ Type R

The strong response for the Japanese market FD2 Civic Type R in Malaysia contributed to the internationalization of the Type R brand. The subsequent generation FK8 Civic Type R made its regional debut in Indonesia in 2017, and today Vietnam will host the FL5’s regional debut.

The Vietnam Auto Show opens today. More companies are expected to make important announcements soon.

Volkswagen will be launching its flagship Touareg there, a model that is not on sale in Malaysia due to its high price and low sale volume potential.

Lexus will also be showing its LF-Z, the first time the concept car was shown on this part of the world.

Perhaps it is time that we try to learn a bit more about our fast rising ASEAN neighbour’s culture and language.