The domestic automobile market will face both opportunities and challenges in 2023.
Automotive experts believe that 2023 will be a key year for Vietnam to establish itself as an emerging market in the automobile industry, and it is expected to achieve this status in 2024.
The decline in the local car market became evident in April 2023, with car sales decreasing by 47% compared to the same period in 2022. In May 2023, the situation worsened, with car sales falling by 52%. This decline has affected both imported cars as well as domestically produced and complete cars, prompting automakers to take action to reverse this trend.
To stimulate the market, Vietnamese automakers are offering deep discounts and incentives. Popular car manufacturers such as Toyota, Hyundai, Honda, Mitsubishi, Mazda, KIA, and Nissan are offering reduced registration fees, free accessory sets, free insurance packages, 0% loan interest for the first 6 months, and more from May 2023. , introduced various incentives. These incentives have helped car buyers save significant amounts of money.
The issuance of Decree 41/2023/ND-CP by the Vietnamese government aimed at supporting the domestic automotive industry by reducing registration fees for domestically produced and assembled vehicles by 50%. However, despite this policy and the continuation of incentive programs by automakers and dealers, the local auto market did not recover as fully as expected. There were two main factors contributing to the ongoing challenges.
First, although automobile inventories have gradually decreased since July, they remain relatively high, meaning that supply exceeds demand. This imbalance in supply and demand affected the market’s ability to fully recover.
Second, a significant number of consumers who relied on borrowing money to purchase a car faced higher variable interest rates than in previous years. These interest rate increases made it more difficult for consumers to afford cars, further impacting the auto market recovery.
Despite these challenges, car companies operating in Vietnam have maintained the number of models and show no signs of cutting back or stopping sales. In 2023, nearly 40 new car models were launched, mainly focusing on mid-range city cars in the B and C segments. Some of these new models, such as the Toyota Vios and Mazda CX-5, benefited from the registration fee reduction policy, attracted attention and orders from consumers, and maintained their status as monthly best-selling vehicles.
Car sales temporarily declined, but auto experts expect the situation to gradually improve towards the end of the year.
According to the Vietnam Automobile Manufacturers Association (VAMA), car sales in the first 11 months of this year reached 263,251 units, down 28.72% from the same period last year. Although this decline affected car companies’ profits, it did not significantly damage market fundamentals.
A notable exception to the overall market trend was electric vehicle sales, thanks to VinFast’s new models. VinFast delivered 10,027 electric vehicles to customers in the third quarter of 2023. This was an increase of 5% compared to the previous quarter.
According to a VAMA report, SUV sales surpassed sedans for the first time in November 2023, with 54,097 units sold, making it the most popular vehicle model in Vietnam. The sporty, muscular design of SUVs often appeals to younger consumer groups, and this potential has increased in recent years. This change in consumer preferences indicates a clear shift in Vietnam’s automobile market.
Economic challenges appear to be influencing consumer preferences for small cars in the B-Class sedan segment. Popular models in this segment include Toyota Vios, Hyundai Accent, and Honda City.
Meanwhile, B-class SUVs like Hyundai Creta, Toyota Corolla Cross, and Kia Seltos are also preferred by consumers.
The transportation vehicle company is prioritizing the purchase of Grade A and B sedan and crossover/SUV models, including the Hyundai Grand i10, Kia Morning, Toyota Vios, Mitsubishi Xpander, and Honda City.
VinFast’s electric SUVs, VF E34 and VF 8, are gaining popularity due to changing consumer preferences and Vietnam’s favorable special consumption tax (SCT) policy for electric vehicles. These models achieved the best-selling status in April and May 2023.
Furthermore, the development of Vietnam’s automobile market in 2022 is attracting great interest from major Chinese automobile manufacturers. From the end of 2022 to the beginning of 2023, a series of Chinese car models will be introduced to Vietnam. However, most Chinese automakers remain cautious and are carefully taking all steps to avoid the same mistakes they made when entering the Vietnamese market 15 years ago.
vietnam plus