The automotive industry in Vietnam is facing a challenge with most assembled and imported vehicles having high fuel consumption rates. With the deadline to meet new fuel consumption regulations looming, changes need to be made.
Mandating Fuel-Efficient Vehicles
In 2022, the Prime Minister issued a decision to implement fuel consumption limits for road motor vehicles, aiming to minimize greenhouse gas emissions. This decision sets a timeline for the transportation industry to transition to more efficient vehicles.
Many current car models have high fuel consumption rates. |
By the end of September 2024, the Ministry of Transport (now the Ministry of Construction) also decided on a plan to reduce greenhouse gas emissions in the transport sector, effective from 2030. The plan sets specific fuel consumption targets for motorcycles and different categories of automobiles.
The Ministry of Construction has tasked the Vietnam Register to develop energy consumption limit standards, expected to be issued this year. This will provide a framework for businesses to self-evaluate and prepare before the official standards come into force.
Automotive Manufacturers’ Response
Many businesses have proactively developed plans to transition to newer, more fuel-efficient models. Toyota Vietnam, for instance, plans to focus on hybrid vehicles, already introducing 6 hybrid models to the domestic market. Volkswagen Vietnam is also aligning with the new regulations, communicating the updated fuel consumption requirements to their headquarters for product planning.
Luxury car brands like Mercedes and Audi, known for their high fuel consumption, are also making the shift. However, considering Vietnam a small market, these brands may not produce exclusive models for Vietnamese customers. Instead, they plan to offer smaller segments with lower fuel consumption, followed by hybrid and electric vehicles. Audi currently offers 4 electric models in Vietnam, while Mercedes has 6.
Balancing Environmental and Economic Interests
According to reports, if the MEPS standard is implemented, up to 97% of internal combustion engine vehicles will not meet the requirements. This could result in a significant drop in annual car sales, impacting the economy and government revenue. An alternative solution, the CAFC approach, which considers the average fuel consumption of a manufacturer’s entire fleet, is proposed to balance environmental and economic interests.
Mr. Dao Cong Quyet, representing the Vietnam Automobile Manufacturers’ Association (VAMA), noted that only BEV, HEV, and PHEV vehicles meet the MEPS standard. Thus, the MEPS solution limits the market to specific types of vehicles, whereas CAFC offers more flexibility. ThS Dinh Trong Khang, Deputy Director of the Institute of Environment, also favored the CAFC model, citing its adaptability and consideration of diverse vehicle types.
Mr. Tran Quang Ha, Deputy Director of the Department of Science, Technology, Environment, and Building Materials, Ministry of Construction, affirmed that fuel consumption control is just one aspect of achieving net-zero emissions by 2050. The authorities are considering a harmonious approach, and the CAFC solution seems more suitable for the current context.
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Requiring Carbon Credits for Car Manufacturers Professor Do Van Dung from Ho Chi Minh City University of Technical Education suggested that evaluating fuel consumption based solely on engine displacement may not be sufficient. He proposed that vehicle testing should consider real-world driving conditions and advanced technologies. To meet emissions standards, car manufacturers should invest in technology upgrades and aim for EURO 6 and 7 standards, as well as develop hybrid and electric vehicles. Additionally, the government could explore the option of requiring car manufacturers to purchase carbon credits to offset emissions from traditional fuel usage. |
Article by NGUYEN HAI
– 08:15 05/04/2025
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