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Analyst Pin-board: Which opportunities for DRC in 2020?

In the period of 2018-2020, Vietnam's tire industry is expected to grow at a CARG of 8% which is slightly higher than the world average. This will mostly come from the increasing demand for passenger and commercial cars. Demand for vehicles increases with the growth of the economy. On top of that the government actively supports the development of the automobile and parts industries, which should  be supportive for the local tire sector. There are two sides competing in the Vietnam's tire market: one side is the domestic tire manufacturing companies, and the other is FDI tire manufacturing companies. The production scale of FDI enterprises is relatively large compared to domestic enterprises. Specifically, the annual radial tires capacity of Sailun Vietnam, Kumho Vietnam and Bridgestone Vietnam is 12 million, 6.3 million and 17 million tires, respectively. Meanwhile, the largest domestic companies such as CSM, DRC or SRC only produces less than one million radial tires per year. FDI enterprises have the advantage of high-quality products but also popular brand names. The reduction of the import tax stated in various free trade agreements (WTO, AFTA, ATIGA, CPTPP, EVFTA) will open the market to more foreign tire products at affordable prices. Therefore, domestic companies will probably be unable to compete in the segment of passenger car tires. This segment is considered very attractive. DRC which focuses on heavy and light truck tires, while Sao Vang Rubber Company concentrates on aircraft and special vehicles tires, will force the company to look for new markets, including exports.