Vietnam faces potential phase-out of gasoline, diesel vehicles amid new fuel efficiency targets

This ambitious regulation aims to accelerate the nation's shift toward cleaner and more energy-efficient transportation, signaling a significant transition for Vietnam’s automotive industry.

As the market experiences a strong shift toward hybrid technology, the new draft regulation from the Ministry of Construction poses a significant challenge for the entire industry.

Specifically, the proposed CAFC standard is seen by VAMA as a figure that could force 96 percent of gasoline and diesel vehicles, along with 14 percent of hybrid vehicles, to cease sales in the domestic market.

The hybrid boom

The Vietnamese automobile market is witnessing a surge in hybrid technology, with many positive signs.

According to VAMA, Toyota continues to affirm its leading position by owning three out of the five best-selling hybrid models in the market. Notably, the Camry hybrid has surpassed its gasoline counterparts in sales, signaling a clear shift in consumer preferences in Vietnam.

The vibrancy of this segment is evident from the introduction of nine new hybrid models in the first half of 2025 alone.

Data from Google Trends shows a 4 percent increase in search queries related to hybrids, while data from Younet Media reveals more than 236,000 discussions on the topic in the first half of the year.

Within this segment, hybrid technologies are clearly distinguishing themselves.

Plug-in Hybrid Electric Vehicles (PHEVs) have attracted attention due to a series of newly launched Chinese models, but concerns about cost and charging infrastructure remain.

Hybrid Electric Vehicles (HEVs) are considered a "safe bet" thanks to established brands like Toyota and Honda.

Meanwhile, Mild Hybrid Electric Vehicles (MHEVs) are gasoline vehicles with small electric motors. Although they are fewer in number, they are well-received by customers due to their affordability and simplicity.

However, there is still a gap between sales and social media discussions. The Honda HR-V Hybrid and Toyota Innova Cross Hybrid rank among the top-selling models, but they only place 8th-9th in terms of "buzz" on social media.

Currently, each car manufacturer follows a different business strategy. The most common approach is to sell both internal combustion engine (ICE) and HEV or EV vehicles, as seen with Toyota, Honda, Subaru, Ford, Kia, Hyundai, Mercedes, and BMW.

Some manufacturers, such as Mitsubishi, Isuzu, Jeep, and Volkswagen, only sell ICE vehicles, while a few brands, like VinFast and Wuling, focus exclusively on EVs.

Concerns over the 2030 regulation

The Ministry of Construction is seeking feedback on a proposed regulation that would require the CAFC of all passenger vehicles sold in Vietnam to reach 4.83 liters/100km by 2030.

According to VAMA, this standard is "too strict" and could force 96 percent of gasoline and diesel vehicles, along with 14 percent of existing hybrid vehicles, to stop selling because they would not meet the new requirement.

In reality, even the most fuel-efficient models, such as the Toyota Wigo (4.5-5.5 liters/100km) and the Vios (5.08-7.62 liters/100km), would fail to meet the proposed standard.

Only a few new hybrid models have an advantage: the Toyota Yaris Cross HEV achieves 3.56-3.8 liters/100km, and the Camry HEV reaches 4.11-4.4 liters/100km.

To ensure the entire industry meets the 4.83 liters/100km target, manufacturers would need to increase the production of electrified vehicles (including hybrids, PHEVs, and EVs) by nearly 10 times over the next five years.

VAMA considers this "unfeasible," given the limited charging infrastructure and consumer habits.

To alleviate the pressure, VAMA has proposed a softer roadmap: 6.7 liters/100km by 2027; 6.5 liters/100km by 2028; 6.3 liters/100km by 2029; and 6 liters/100km by 2030.

Under this scenario, manufacturers would only need to reduce gasoline vehicle production by 34 percent and increase electrified vehicle output by about 366 percent. This is still a challenge, but much more feasible than the current proposal.

An automotive expert commented that if the 4.83 liters/100km goal remains unchanged, companies that only sell ICE vehicles or luxury vehicles with large engines will have little chance.

In contrast, hybrid and EV brands could quickly gain market share.

According to the expert, fuel consumption control remains a global trend aimed at reducing carbon emissions. Vietnam's challenge is not whether to implement these regulations, but how to balance green goals, business capabilities, and infrastructure readiness.