Vietnam’s car market set for booming by year-end
The fact that the pandemic has somehow been subdued and many provinces/cities are reopening are factors to support the recovery of the car industry.
Vietnam’s car market is poised for a booming period by year-end following months of freezing and plunge in car sales number.
|Customers at a car showroom in Hanoi. Photo: Hoang Linh|
The recent lockdown across cities/provinces in the north and south following the fourth Covid-19 outbreak forced car dealers in Vietnam to turn to online operation and sale promotion to boost sales.
A range of car brands from mini compact to luxuries such as Hyundai, Kia, Toyota, Mazda, Ford, or VinFast is expected to offer steep discounts of up to thousands of dollars. Customers looking to buy popular car models at present receive rebates of VND120 million (US$5,300) for Honda CR-V, Peugeot 5008 (VND155 million or $6,850), or Suzuki Ertiga Sport (VND100 million or $4,419), while others of Subaru Forester, Mazda CX-8, Kia Sorento and Mercedes-Benz S450 from VND70-300 million ($3,000-13,200).
Such efforts, however, could not save the market that is on a downtrend. A report from the Vietnam Automobile Manufacturers’ Association (VAMA) revealed the car sales number from its members as of September witnessed a sharp drop of 18% against the pre-Covid-19 period in 2019.
A representative of the KIA car dealer at Hoang Mai District told The Hanoi Times the car market in the North was almost frozen in the past months, with the sale figures plunging by 70%.
Not only new cars are facing a grim outlook, but many showrooms for used cars have been struggling for keeping their businesses afloat. Vu Thai Hoang, the owner of Thai Hoang at Nam Tu Liem District, said he had to close the showroom since late July to comply with Covid-19 restriction measures.
“While we shift to the online sale, the number of customers remained insignificant as they prefer to come to the showroom and look at the cars,” Hoang told The Hanoi Times.
Reasons for optimistic
The situation, nevertheless, has gradually improved as Hanoi is now easing restriction measures.
Data from the VAMA revealed the sale figures of passenger cars in September rose by 34% against the previous month to 8,347, while that of commercial cars by 108% to 4,886 units.
From a total of 13,537 cars sold last month, 7,316 were domestically assembled/produced, up 37% compared to August, and 6,221 were imported, up 76%.
Hoang noted since Hanoi is now returning to a new normal by flexible adapting to the pandemic, customers are now coming back.
“In October, my showroom sold 23 cars, some customers are still in the waiting line due to the lack of supply,” he said, expecting the market to heat up during the remainder of the year and partly offset the difficulties caused by the pandemic.
Meanwhile, experts said customers are still waiting for the Government’s final decision on a proposal of cutting the registration fee by half from the Ministry of Finance (MoF) before making the purchase.
The MoF noted the policy would only last around six months as a short-term solution to alleviate the pandemic impacts on the car industry.
“A lower registration fee would provide a much-needed boost for the car market to end the year on a high note, in turn contributing to the economic recovery process,” said the KIA representative.
VAMA General Secretary Ninh Huu Chan said customers may save up to dozens of thousands of dollars when the policy kicks off. “ The money saved may go up to around VND300 million ($13,200) for domestically assembled cars such as Mercedes-Benz,” Chan said.
Nguyen Anh Tuan, representative of car dealer Mitsubishi Cau Dien said a large number of customers have paid in advance for new car models in anticipation of new programs.
For the last six months of 2020, a similar policy led to revenue from registration fees dropping by VND7.31 trillion (US$321.6 million), but total budget collection rising by VND14.1 trillion ($619.5 million) as a result of car sales nearly doubling to 102,900 against the first half of 2020.
Car market expert Nguyen Minh Do noted people tend to buy cars during the final months of 2021, as shown in the past years.
“The fact that the pandemic has somehow been subdued and many provinces/cities are reopening are factors to support the recovery of the car industry,” he told The Hanoi Times.
Do, however, warned the car market may face a temporary shortage of supply due to a surge in demand, while logistics issues due to the pandemic could also hamper production activities during the year-end period.
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