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Domestic car market sees sluggish sales in year-end sale season

While normally a positive time for car sales, this year the domestic automobile market is seeing gloomy days as Tet approaches, according to local car experts.

The sluggish sales are attributed to a tightening credit market, higher interest rates and stagnant real estate and stock markets. Few people have money to buy cars so those who are looking at this time must really have a need and enough money.

Nguyen Van Thang, an owner of a car dealership on Le Van Luong street, said most banks do not give priority to car loans while interest rates are quite high. This factor greatly affected the car market in general and used cars in particular, especially luxury and expensive ones.

In November, many car models saw slight increases in prices due to rising input costs, logistics, and exchange rates. However, car traders had to reduce prices in early December due to sluggish sales.

Nguyen Van Nam, sale manager of a Hyundai showroom in Hanoi, said that in December, he lowered prices by between 15-30 million VND (625-1,250 USD) of popular Hyundai models such as Accent, Grand i10, and Elantra.

Le Thai Son, a car salesman at a Honda showroom in Cau Giay district, said the prices of many Honda models were reduced, for instance, the Honda CR-V at this time would get an attractive discount of between 70-90 million VND.

According to a survey, most car manufacturers are offering good discounts. For instance, Toyota Vietnam has offered a promotion campaign for models such as Veloz, Vios, or the 7-seat MPV segment with discounts of between 30-40 million VND. Meanwhile, many dealers also have launched promotions by offering free registration or direct discounts on price.

No customers, no business

Despite racing to slash selling prices or launching promotion campaigns, the local car market has remained quiet.

Tran Duc Hung, a Hanoi resident who is planning to purchase a vehicle, found himself wondering whether he should opt for a new car or not. Hung said that if he bought a new car, he would have to borrow about 400 million VND (16,666 USD) from a commercial bank for a term of five years.

With this loan, Hung has to pay an amount of nearly 6.7 million VND monthly, of which 4.5 million VND was interest. Once his debt was paid off, his car would end up costing an additional 130 million VND due to bank interest.

Sale manager of a Hyundai showroom Van Nam said since the end of the second quarter this year, car loans from commercial banks have had an interest rate of 13-15.5% a year, while car loans during the COVID-19 pandemic were between 9.5-9.9% a year.

Car loans offered by foreign banks in Vietnam are between 10-11% per year, however, lending procedures are very strict, and borrowers must have high incomes and their salary must be paid via banks.

Nam said his showroom’s car sales have decreased by about 40% from the beginning of this year. His showroom set a target of selling 200 units in December, but it has been hard to achieve it.

Frozen used car sales

Meanwhile, used car sales have been gloomier, said Dinh Hung, a car trader. Since he started trading used cars, this has been the bleakest time. Hung attributed his slow sales to higher interest rates and tightening credit. He complained that he had to borrow money from banks for his business, and it was very difficult to pay off his loans as his used cars have gone unsold. In addition, manufacturers are offering attractive discounts for new cars.

Sharing the same view, car dealer Nguyen Quyet said in the first months of this year, the used car market was boisterous and many used vehicles were even sold at higher prices than new cars due to global supply shortages. Contrary to early months, the year-end used car market is quite gloomy. Meanwhile, Quyet still has to pay salaries to his staff, rent payment and bank interest, and sell vehicles at a loss.

November auto sales dip after four months of growth

November auto sales posted a decline from October after four consecutive months of growth, but sales for the year so far have still achieved double-digit growth.

According to the Vietnam Automobile Manufacturers Association (VAMA) report issued on December 13, automobile sales including imports were down 5.9% year-on-year to 36,371 units in November. CKD volume reached 18,813 units and CBU volume was 17,558 units.

Truong Hai Auto Corporation (Thaco) led in the period with 123,140 units sold, up 38% year-on-year. This included a 51% rise in Kia sales to 57,784 units, a 52% jump in Mazda volume to 33,552 units and a 68% surge in Peugeot sales to 9,725 units while Thaco truck sales fell 6% to 20,143.

The company was followed by Toyota with 81,491 units, and Mitsubishi with 36,805 units. Honda and Ford rounded out the top five. Last month, automaker VinFast shipped its first batch of 999 electric cars to the US. The company expects to sell 750,000 electric vehicles annually by 2026.

Total sales in the first 11 months this year rose 43% year-on-year to 369,334 units. Of that total, sales of CKD vehicles reached 208,822 and those of CBU imported vehicles reached 160,512 units./.