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Bachelor Thesis Why motorbikes are popular in Vietnam Author: Tran, Nguyen Phuong Thanh Goethe ID: 5952195 VGU ID: 1507 Supervisor: Dr. Lars Pilz Goethe University Frankfurt 10.2017 Table of contents List of tables ................................................................................................................ 3 List of figures ............................................................................................................... 4 List of abbreviations ..................................................................................................... 6 Part 1. Introduction ...................................................................................................... 8 Part 2. Analysis of the Motorbike Market in Vietnam ................................................... 9 2.1. Societal Preferences .............................................................................. 10 2.1.1. An Overview on Vietnam’s Motorcycle Ownership ................... 10 2.1.2. Literature Review on Vehicle Ownership Modelling ................. 15 2.1.3. Economic Growth and Vehicle Ownership ............................... 16 2.1.4. Vietnam People’s Preferences for Motorcycles ........................ 19 2.1.5. Public transportation ................................................................. 22 2.2. Public infrastructure ............................................................................... 27 2.3. Underdeveloped Automotive Industry .................................................... 34 2.3.1. The motorcycle and automobile industries in Vietnam ............. 34 2.3.2. Underdeveloped Automotive Industry ...................................... 40 2.4. Tax Policy .............................................................................................. 42 2.4.1. Tax structure for passenger cars in Vietnam ............................ 43 2.4.2. Fees in buying and owning a car in Vietnam ............................ 44 2.4.3. Comparison with other countries .............................................. 44 Part 3. Discussions .................................................................................................... 46 3.1. Social Impact ......................................................................................... 46 3.1.1. Traffic Accidents ....................................................................... 46 3.1.2. Congestions ............................................................................. 51 3.2. Environmental Impact ............................................................................ 52 3.3. Solutions by the government.................................................................. 55 Part 4. Conclusion ..................................................................................................... 57 References ................................................................................................................ 60 2 List of tables Table 1. Motorcycle and Car Ownership Rate for Selected Countries ....................... 11 Table 2. Motorcycle Saturation Level and Income Threshold for selected countries . 18 Table 3. Space occupied by a motorcycle and a car while parking and moving ........ 21 Table 4. Vietnam’s Road Network by type of road for 2006 and 2016 ....................... 29 Table 5. Localization rate of selected automobile companies in Vietnam (2007) ...... 41 3 List of figures Figure 1. GDP based on PPP per capita for selected countries from 1980 – 2016 (in 2017 US Dollars) ........................................................................................ 10 Figure 2. Vietnam Motorcycle and Passenger Car Ownership in Urban Areas (2004- 2014) .......................................................................................................... 12 Figure 3. Vietnam Motorcycle and Passenger Car Ownership in Rural Areas (2004- 2014) .......................................................................................................... 12 Figure 4. Vietnam Motorcycle Ownership Trend for 5 Income Groups (2004-2014) .. 14 Figure 5. Vietnam Passenger Car Ownership Trend for 5 Income Groups (2004-2014) .................................................................................................................... 14 Figure 6. Modal split of selected Asian cities ............................................................. 19 Figure 7. Bus Ridership in Vietnam (1979-2002) ....................................................... 24 Figure 8. Road Density Comparison between selected countries (2006) .................. 29 Figure 9. Distribution of Vietnam’s Road Network by category (2016) ...................... 30 Figure 10. Quality of Vietnam’s Road Network by category (2006) ........................... 31 Figure 11. Land Dedicated to Transport Comparison for selected cities (% of all land area) ......................................................................................................... 33 Figure 12. Number of Registered Motorcycles and Automobiles in Vietnam (1990- 2006) ........................................................................................................ 35 Figure 13. Motorcycle sales in Vietnam by manufacturer (1998-2009) ...................... 38 Figure 14. Motorcycle Sales in Vietnam (1998-2016) ................................................ 39 Figure 15. The Vicious Circle of the Underdevelopment of the Vietnamese Automobile Industry ..................................................................................................... 42 Figure 16. Car Price Comparison for Selected Countries (2017) ............................... 45 Figure 17. In the Price of a Car: Automobile Cost, Taxes and Tariffs Comparison between Vietnam, Malaysia, Thailand, and the Philippines (2004) ........... 46 4 Figure 18. Road traffic deaths by type of road user (2013)........................................ 48 Figure 19. Road Traffic Safety in Vietnam: Accidents, Deaths, and the Injured (2012- 2016) ........................................................................................................ 49 Figure 20. Road and Motorcycle Fatality Rate Comparison for selected countries (2015) ....................................................................................................... 51 Figure 21. Average Annual PM2.5 Concentration in Urban Areas Comparison for selected countries (2014) ......................................................................... 54 5 List of abbreviations ADB Asian Development Bank ASEAN Association of Southeast Asian Nations BRT Bus Rapid Transit CAGR Compound Annual Growth Rate CBU Completely Built Up CKD Completely Knocked Down DBST Double Bituminous Surface Treatment DRVN Directorate for Roads of Vietnam EPA (United States) Environmental Protection Agency FDI Foreign Direct Investment GDP Gross Domestic Product GSO General Statistics Office HAIDEP The Comprehensive Urban Development Programme in Hanoi Capital City of the Socialist Republic of Vietnam HCMC Ho Chi Minh City HDI Human Development Index IMF International Monetary Fund JAMA Japan Automobile Manufacturers Association JICA Japan International Cooperation Agency MOCPT (Ho Chi Minh City) Management and Operation Center for Public Transport MRT Mass Rapid Transit OEM Original Equipment Manufacturer 6 PM Particulate Matter PPP Purchasing Power Parity PwC PricewaterhouseCoopers R&D Research and Development UMRT Urban Mass Rapid Transit UNDP United Nations Development Programme UNESCAP United Nations Economic and Social Commission for Asia and the Pacific US United States of America USD US dollars USSR Union of Soviet Socialist Republics VAMM Vietnam Association of Motorcycle Manufacturers VAT Value Added Tax VITRANSS 2 The comprehensive study on the sustainable development of transport system in Vietnam VMEP Vietnam Manufacture and Export Processing Co., Ltd. VND Viet Nam Dong WHO World Health Organization WTO World Trade Organization 7 1. Introduction In the last 30 years since Doi Moi1 – Vietnam’s grand economic reform in 1986, Vietnam’s economy has witnessed incredible growth with an annual average GDP growth rate of 6.41%, and an annual average GDP per
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