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Vietnam’s car market: Hidden number in the last months

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Vietnam’s car market: Hidden number in the last months

Updated on : 25-07-2017


Vietnam’s car market: Hidden number in the last months

VCN – Though import duty decreased, the number of imported CBU cars did not increase; selling price much decreased, the number of sold cars reduced. This is contrary to predictions and expectations of consumers and enterprises operating and manufacturing cars. In the last months of 2017, the Vietnam’s car market is still a hidden number. 

In spite of promotion or discount of enterprises, the car market still has not reached the expected growth rate.
Photo by Nguyen Ha.

 

Enterprises take stone to hit on their feet

In 2017, the Vietnam’s car market spent more than a half year of consecutive price reduction from almost brands. This has never happened before in the Vietnam’s car market, which is the world's highest selling car price, and the selling price seems to increase but rarely decrease. The trend of drastic and deep sales spreads from the manufacturers, importers and dealers and even retail stores.

The discount is not only to encourage consumers when the import duty road map of CBU cars in the region was sharply decreased (from 40% to 30% and to 0% in 2018) but also to increase number and market share from famous brands.

This discount race may benefit a consumer, but it also may affect another consumer who has bought a car a few days ago but suffered a loss of dozens even hundreds of millions of VND, regardless of depreciation when re-selling.

This makes consumers confused and unwilling to buy cars. The capital is thought to make a positive impact but it does not. In the first six months of 2017, the sales of cars almost reduced. In January, total consumed cars on the market reached 20.323 units, down 39% over December 2016. And in order to promote the market, price reduction started from big brand Truong Hai with big discount for Mazda brand to many other brands.

In February 2017, the market consumed 17,621 cars, up 13% over January 2017. The high reduction is partly due to Tet’s holidays. Thus, in March 2017, the market consumed 26,872 cars, up by 52% over February 2017 and up 8% over the same period last year.

As of April 2017, despite price reduction competition of enterprises and dealers, the whole market’s sales only accounted for 21,942 cars, down 18% over the last month and down 15% over the same period last year. In May 2017 car sold out reached 23,232 cars, up 6% over the last month but down 1% year-on-year. In June 2017, the sales hit 24,356 cars, up 5% over the last year but won about 0.2% year-on-year.

In the first six months, the market’s consumption averaged 134,268 cars, down 1% compared to the same period last year.

This result is beyond prediction of enterprises. Although enterprises had no choice but to join the discount rate, the number of sold car was not as expected. The confusion and worry cover car enterprises and dealers. If they do not offer a discount, they will not attract consumers, but how is a discount and how long? Many enterprises and dealers do not dare to think of interests, even suffer from the loss.

Customers have a common question that if the market offers the maximum discount or not and whether the time is good to buy a car or not regardless of confirmation of VAMA on the maximum discount, but the purchasing power does not highly grow.

Discount is to stimulate the market demand but the discount race without destination of enterprises is considered as taking stone to hit on their feet

Imports also not increased

At the beginning of 2017, the import duty for CBU car in the region fell from 40% to 30%. Before this time, manufacturers also prepared a plan to import new brands. A large number of cars was forecasted to be imported to Vietnam, but it wasn’t.

The number of CBU cars only increased in the first three months of the year. Specifically, in January 2017, the country imported nearly 7.4 thousand cars worth US$ 153 million (up 25.5 % in volume and up 4 % in value year-on-year); in February over 8 thousand cars worth US$ 158 million (up 50% in volume and 22% in value) and in March, 13,000 cars worth US$ 150 million (up 62.5% in volume and down 18.5% in value).

However, imported cars began to fall from April 2017 to 6,962 units, down 37.8% from the previous month, reaching US$ 169.5 million (down 6%). In May 2017, there was a slight increase with 9,935 cars valued at US$ 215.8 million. In June 2017, this number was down more than 22%, to 7,817 cars valued at US$ 171.1 million.

Luxury car brands from non-ASEAN countries accounted for a majority of imported CBU cars (without tax incentives). In addition to the brands are "entangled" with the management agencies of BMW, Jaguar and Land Rover, other luxury car brands are also in the vicious circle of discount and low consumption of the car market in general. Data from the luxury car operators shows that, in the first 6 months, totally sold luxury and super luxury cars reach about 4,500 units, only 86% of the same period in 2016.

Hidden number in the second half of the year

August is an expecting moment for the Vietnam’s car market when the biggest auto show of the year is going to take place. Every year, the show will be the place where companies launch their new products and attractive promotions to stimulate the market.

However, this movement may not happen in this year. Because, just a few months until the import duty rate in the region to 0%, if the price race will continue to happen as the first 6 months of 2017 or not? This question makes consumers delay in buying new cars

Moreover, this show is no longer as attractive as previous years when the number of participating enterprises is only 12 car brands. The importing enterprises have their own playground in October, large enterprise Truong Hai does not participate in (dedicated to it private show in December) and Toyota seems not to bring much to this show when this year has few new car brands and the domestically assembled cars are narrowed.

Along with that, enterprises in the field of car industry are waiting for many new business conditions stipulated in the Decree on conditions of the car business, production, assembly, imports and warranty guarantee and maintenance to be signed in the coming time.

The decree will decide quite a lot of key points for enterprises such as whether genuine authorization is required for car imports or not; Provision on responsibility of enterprises for the warranty and maintenance of cars for customers; Responsibility for retrieving cars with technical errors; Conditions on facilities such as factory, assembly line, welding line, paint line, product quality inspection line and road test.

According to the roadmap, the Decree must be promulgated on July 1, 2017. However, the above time has passed, drafting agencies seems not to be unanimous. This significantly affects the business and production plans of car enterprises.

Therefore, the car market in the last six month of the year is still a hidden number.

By Nguyen Ha/Huyen Trang


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