The Vietnam Automobile Manufacturers’ Association (VAMA) reported that its member companies sold 404,635 cars in 2022. If counting the sales by TC Motor (81,852) and VinFast (22,330), the total number of cars sold in 2022 reached 508,545. After three years of slow sales (400,000), the auto market boomed in 2022 with a growth rate of 24 percent over 2021. 

This growth was attributed to the government's demand stimulus policy of a 50 percent vehicle registration tax reduction applied in the first five months of 2022 and the launch of new models, mostly low-cost cars.

Experts said auto sales in 2022 would have been higher than 508,545 if the car part supply chain had not been disrupted and a serious shortage of chips had not occurred in H1 2022.

While the gap in car sales between Vietnam and Thailand, Indonesia and Malaysia has narrowed, Vietnam is far behind them in terms of production capacity. According to ASEAN Automobile Federation (AAF), Thailand remains the biggest automobile manufacturer in the region with 1,790,082 cars made by the end of November 2022, followed by Indonesia 1,330,238, Malaysia 633,412 and Vietnam 407,100.

Indonesia and Thailand were also the biggest auto exports to Vietnam, with 72,671 cars for Indonesia and 72,034 for Thailand.

The Ministry of Industry and Trade (MOIT) predicted that auto sales in Vietnam will rise to 700,000-800,000 in 2025 and over 1 million in 2030. 

Local manufacturer VinFast plans to manufacture electric cars in large quantities for domestic sale and export. Meanwhile, TC Motor has inaugurated its second factory in Ninh Binh, raising its total capacity to 180,000 cars/year.

Skoda and Chery plan to team up with Vietnamese partners to set up joint ventures to assemble cars, which shows the trend of relocating automobile production lines from ASEAN to Vietnam.

Dark parts 

In the first five months of 2022, many manufacturers did not have cars to sell because of the disruption of supply and car part chains. The overly high demand in the market pushed the prices of cars up. Buyers not only had to spend big money to get cars, but also had to wait many months to get deliveries.

Meanwhile, since the fourth quarter of 2022, the car prices decreased sharply because of profuse supply, while the demand was no longer high when banks tightened lending. Car dealers even had to sell cars at low prices to stop loss, but it was difficult to find buyers.

Though manufacturers rushed to stimulate demand by slashing selling prices of many models, VAMA’s report showed that only 35,301 cars were sold in December 2022, a 3 percent decrease from November and 24 percent from the same period of the year before. This was really a rarely seen thing in the Vietnamese market. In general, the demand always increases at the end of the year.

Analysts said the supply is no longer short, but the purchasing power will still be influenced by the economic recession, at least until H1 2023.

Whether the figure of 500,000 cars sold in 2022 will continue to be maintained in 2023 will depend on the solutions to be applied by the government to boost the economy in general and the automobile industry in particular.

Hoang Hiep