The domestic auto market in Vietnam is experiencing a decline in car sales due to sluggish customer demand compared to previous years, according to local car experts.
The experts said the number of customers visiting car dealerships has not increased compared to previous years, despite price reductions and promotions offered by car manufacturers during the peak shopping season.
According to a car sales staff at Toyota dealerships in the central area of Hanoi, cars priced under VND1 billion (US$40,983) are particularly challenging to sell. They attribute this trend to the difficult economic conditions and the reluctance of people to spend money on purchasing cars.
Anh Duc, a car salesman in Pham Hung Street, expressed surprise at the low sales, mentioning that in previous years, they could sell hundreds of cars each month at this time, but recently the numbers have not been reaching even half of that.
Many dealers hope that demand for cars will increase at the end of the year and the market will become boisterous; however, it is so far still quiet. To reduce their inventory and recover some of their costs, dealers may resort to reducing prices and offering discounts or incentives to attract buyers. In some cases, they may even have to sell cars at a loss to move inventory and free up capital.
Car consumption in Vietnam has experienced a deep decline this year, despite various efforts to stimulate sales such as launching new models, offering discounts, and providing registration fee support and attractive gifts.
Specifically, Toyota Vietnam has initiated a program starting in December to offer a 50% discount on registration fees for certain car models. In addition to this discount, there is also a 50% reduction in registration fees for domestically assembled cars as part of the general policy. This policy will be in effect until the end of 2023.
Honda Vietnam has also announced a 50% registration fee discount program for all car models on sale starting from Dec. 5. Additionally, domestically produced and assembled vehicles are still receiving 50% registration fee support from the government.
As for Hyundai, the Hyundai Stargazer model had a listed price of VND75-685 million ($23,565-$28,073). In November, the price was reduced by up to 130 million, but it still faced difficulties in selling. In December, the price was further reduced by another VND10 million. Furthermore, the high-end diesel version of the Santa Fe model, which was produced in 2022, is being reduced by VND210 million.
The decrease in car purchasing power compared to the same period in 2022 is a concerning trend, especially considering that car sales were lower than during the period when the market was affected by the Covid-19 pandemic.
The statistics from the Vietnam Automobile Manufacturers Association (VAMA) indicate a significant decline in car sales, with a 29% decrease in the first 10 months of 2023 compared to the same period last year, equivalent to the absolute number of 70,000 vehicles.
Among the car manufacturers, Toyota Vietnam seems to be the most affected, with a 42% decrease in sales during the first 10 months of 2023, amounting to nearly 30,300 vehicles. Other brands like Kia, Honda, and Mitsubishi also experienced significant declines, with decreases of 39%, 36%, and 28%, respectively.
Hyundai is another car company facing challenges, with a sales decrease of approximately 25%, equivalent to more than 16,000 vehicles. These figures suggest that the automotive market in Vietnam is currently facing obstacles and uncertainties.
Economist Ngo Tri Long said that the selling prices of many car models have reached their lowest level in nearly 10 years in 2023.
Some businesses and dealers may have hinted at cutting incentives at the end of the year due to anticipated increased demand; however, car discount promotions are still prevalent and becoming even deeper.
The difficulties are expected to continue into 2024. High inventory levels can also be a challenge for auto businesses. If consumer demand is lower than expected, dealerships and manufacturers may face excess inventory, which can lead to increased costs and reduced profitability, according to industry insiders.