Cars have been selling very slowly in amid Covid-19 and social distancing. A gloomy future has been predicted for the automobile industry.
The Vietnam Automobile Manufacturers’ Association (VAMA) reported that its member companies sold 8,884 cars in August, a sharp fall of 45 percent compared with July and 57 percent with August 2020. This was the fifth consecutive month the market saw sales decrease. August saw the lowest sales since 2015.
The decline has also been reported by TC Motor, not a member of VAMA, with 2,182 cars sold in August, down by 54 percent compared with July and 60 percent with August 2020.
Meanwhile, VinFast sold 2,310 cars, a decrease from the 3,782 cars in July, but it was still 1,494 cars higher than August 2020.
August coincided with the seven month of the lunar year, the month of forsaken spirits, and people do not make important purchases in that month. This, plus social distancing applied in many cities and provinces, had a strong impact on the car market.
According to VAMA, since the fourth wave broke out on April 27, some factories have had to suspend operation. The others are still maintaining operation, but have high inventories because sales agents closed.
It’s estimated that over 200 sales agents of VAMA member companies have not reopened and 200 service workshops still cannot operate.
The supply chain and distribution activities have been stagnant. Some manufacturers have reported a sales drop of over 60 percent. If compared with August 2019, before the Covid-19 pandemic broke out, the sales of VAMA members dropped by 18 percent.
Also according to VAMA, only 5,345 domestically assembled cars were sold in August, 41 percent lower than the month before and 17 percent than August 2019. In the first eight months of the year, VAMA members could sell 99.454 cars of this kind.
If counting the sales of TC Motor and VinFast, the total number of domestically assembled cars was 162,000.
As sales were satisfactory in late 2020 and Q1 2021, manufacturers stepped up production. However, the demand dropped unexpectedly in Q2 as result of the fourth pandemic wave.
The inventories, according to the reports of the Ministry of Industry and Trade (MOIT), VAMA and the General Department of Customs (GDC), had reached 40,000 as of the end of July. By the end of August, the predicted figure had surged to 50,000.
Most automobile manufacturers, assemblers and car sales agents in the south have suspended their operation since mid-July. In the north, enterprises are operating at 30-50 percent of capacity. The sales are predicted to continue decreasing by 30-40 percent in the last four months of the year, compared with the same period last year.
Although car manufacturers have cut prices deeply to stimulate demand, the Vietnamese auto market witnessed a record decrease in monthly sales over the past five years when fewer than 9,000 cars were sold in August 2021.
Automobile manufacturers are facing sharp drop in sales and increased inventories as social distancing has been imposed in many cities and provinces, vehicle registration has been halted, and sale agents have had to close the doors.