The domestic market began seeing positive signs in the last months of 2023 thanks to improved macroeconomic indexes and consumer confidence. This, plus the 50 percent vehicle registration tax reduction and increased demand on pre-Tet days, increased sales.

According to the Vietnam Automobile Manufacturers’ Association (VAMA), car sales, including imports and domestically assembled ones, began moving up in September 2023 and sales were stable afterwards with 25,000 cars sold each month. In December 2023, 38,740 cars were sold, which was higher than the monthly sales in 2022.

Analysts predicted that the sales in January 2024 will decrease, but wouldn’t be too sharp. But the real situation is worse than predicted. 

TC Motor reported that only 3,569 Hyundais were sold in January, a drop of 67 percent compared with December 2023. However, the figure was still higher by 73 cars over January 2023.

Toyota Vietnam was one of a few brands which had a good performance in 2023 with 59,207 cars sold, including Lexus cars. However, its sales also dropped sharply in January 2024.

The manufacturer reported that it sold 2,208 cars last month, including 1,143 domestically assembled and 1,065 import products, down 62 percent compared with December 2023 and 22 percent with January 2023. 

Most of the models of the manufacturers had sales drop by over 50 percent. Only Toyota Vios saw the sales increase from 275 in January 2023 to 653 in January 2024.

According to TC Motor, car sales dropped in January because people did not want to buy valuable products on the days just before Tet. 

The expiration of the government’s policy on 50 percent vehicle registration tax cut was also a reason. People postponed their plan to buy cars as they hoped a similar policy would be applied in the future to stimulate demand and support the domestic automobile industry.

However, experts don’t think that the government will once again offer the tax cut, at least in the immediate time. The 50 percent tax cuts were applied twice in the past which led to a state budget collection decrease of VND9 trillion each time.

Weak demand 

Since the second half 2023, manufacturers and dealers have run sale promotions to boost sales. The sales of domestically assembled products were better thanks to the registration tax cut policy.

With the preferential registration tax, car dealers just needed to ease the selling prices to 50 percent of registration tax and offer some gifts, such as car parts and insurance policies, to be able to sell cars. The total preferential value of some car models was up to 150 percent of registration tax. Meanwhile, dealers got lower profits for imports sale because the tax cut was only applied to domestically made products.

In fact, the poor sales in early 2024 were anticipated, because the tax cut policy has expired, while demand is yet to go up again. Therefore, car manufacturers have had to cut selling prices further to maintain preferences equal to those before 2024.

After the report about January sales was released, some Hyundai sales agents decided to slash the selling prices of all three versions of Hyundai Creta to lower the manufacturer's suggested retail prices (MSRP) by VND51-59 million.

The move, according to analysts, not only aims to boost sales after unsatisfactory sales in January (down 79 percent compared with December 2023), but also to compete with Mitsubishi Xforce which turned up in Vietnam in early February.

The prices of Kia Seltos have also been cut by VND8-10 million to become more competitive in the B-class SUV. Also, Hyundai has also slashed the selling prices of 2023 series to ease inventories. The price of Hyundai SantaFe has been cut by VND210 million.

Honda Vietnam continues to offer the 50-100 percent registration tax cut program and a 1-year insurance policy after Tet holiday, applied to best selling models, including City, CR-V, HR-V, Civic and Accord. The sharp price fall of VND200-220 million has been applied for Honda Accord manufactured in early 2023.

As for luxury models, Volkswagen is running a sale promotion with the discount rate of at least VND250 million.

Hoang Hiep