Hanoi (VNA) — The ban of petrol-powered vehicles in Hanoi’s downtown is predicted to pose both short-term and long-term impacts to Vietnam’s auto and motorcycle markets, according to The Dat, an automotive analyst and head of Cartimes at the Industry and Trade Magazine.

Following the Prime Minister's Directive No. 20/CT-TTg issued on July 12, Hanoi will become the first Vietnamese city to ban fossil fuel motorcycles and mopeds from the city's inner Ring Road 1, starting July 1, 2026. This move initiates the country’s gradual transition towards green transportation.

The ban will affect the country’s vehicle market, consumer behaviour, and policy environment, Dat told the Vietnam News Agency.

The policy is predicted to impact in two key phases - the short term (2025–2028) and the long term (post-2028).

In the short term, manufacturers face pressing challenges and opportunities. Companies like VinFast, which have invested heavily in electric vehicle (EV) technology, battery production, and charging infrastructure, are positioned to benefit.

Conversely, traditional petrol vehicle makers, such as Honda and Yamaha, must quickly adapt their production lines and manage the risk of surplus petrol inventory as demand declines. Distributors are expected to promote petrol vehicle sales aggressively to clear stocks, while EV dealerships, particularly VinFast’s, continue expanding in Hanoi and Ho Chi Minh City.

From the consumer perspective, many Hanoi residents may delay vehicle purchases while awaiting more affordable EV models or government supporting policies. However, some will still opt for petrol motorcycles, particularly those in outside the restricted zones. Interest in electric motorcycles is growing, though adoption is limited by high upfront costs and insufficient charging infrastructure, according to Dat.

He held that looking beyond 2028, as bans extend to Ring Roads 2 and 3 by 2030, the transition to electric mobility will accelerate markedly. Manufacturers with strong green technology expertise, such as VinFast, Yadea, and Dat Bike, are expected to dominate, while legacy petrol-focused companies risk losing market share or existing Vietnam. Distributors must pivot towards electric vehicle sales, servicing, and infrastructure. Petrol vehicle dealerships unable to adapt may be forced to close.

Urban consumers will increasingly see electric vehicles as the norm. Yet in rural areas, limited infrastructure means petrol vehicles will remain in use until their legal lifespan ends or the nationwide ban in 2040 is enforced. Simultaneously, demand for public transport — especially electric buses and metro systems — is expected to grow, reducing reliance on private vehicles.

Dat identified significant challenges, chiefly the inadequate charging infrastructure concentrated in major cities, with scarce availability in suburban and rural regions. Building a nationwide charging network requires substantial investment, largely borne by private companies like VinFast, with limited government incentives so far. Battery recycling and disposal pose further obstacles; the technology is costly and complex, and Vietnam currently lacks a comprehensive system, raising environmental concerns.

Additionally, the higher cost of EVs, particularly motorcycles, remains a barrier for many middle- and lower-income consumers. The government has introduced supportive measures including tax exemptions, subsidies for EV buyers, and concessional loans aimed at easing financial burdens and encouraging adoption. If applied consistently, these policies could shift consumer attitudes and improve affordability.

Anticipating the ban, Dat expected a surge in second-hand petrol motorcycle sales in Hanoi, as owners seek to avoid depreciation. He praised initiatives like VinFast’s “swap petrol for electric” programme as a positive incentive but cautioned about the environmental and economic implications of decommissioned petrol vehicles. Many may be relocated to areas beyond the ban, sold domestically or exported. Others could be recycled if appropriate systems are in place, or repurposed for industrial uses within factories before final scrapping.

In conclusion🍸, Dat stressed that Vietnam’s transition to electric vehicles will profoundly reshape its automotive and transport sectors. However, success hinges on coordinated government policies, expanded infrastructure, effective environmental management, and sustained support to ensure a smooth, equitable, and sustainable shift towards greener mobility./.