Luxury car purchasing power improves but deliveries are delayed
According to the Vietnam Register (VR), the number of luxury cars registered in H1 was far higher than the same period last year.
As many as 3,929 Mercedes Benz vehicles were sold in the first half of the year (the figure was 3,071 for the same period last year), leading the luxury car market, followed by Lexus with 966 cars (742). Volvo ranked third with 852 cars sold (469). Meanwhile, BMW reported that it had sold 661 cars (520), Porsche 411 (175), and Audi 254 (235).
Only Land Rover reported a sales drop from 159 cars in H1 2021 to 108 in H1 2022. Chinese Hongqi sold 60 products.
Analysts said the number of luxury cars sold in the first half of the year was higher than that of the same period of 2019, before the Covid-19 outbreak.
Haxaco, which distributes Mercedes cars, reported that the accumulated net revenue in H1 increased by 19.4 percent in H1 to VND3.06 trillion, which came mostly from car trading (92.7 percent, VND2.972 trillion), up 18.8 percent. The post-tax profit increased by 120.3 percent to VND135 billion.
Mercedes Benz is the only luxury brand that has a factory in Vietnam. It specializes in assembling sedans (C-Class, E-Class and S-Class) and five-seat SUV – GLC. The 50 percent cut in vehicle registration tax valid until the end of May 2022 has helped increase sales. CBU (complete built unit) imports were not subject to the policy, but sales increased.
A representative of a luxury car distribution company said the supply of CBU imports is smaller than demand at this time. Clients ordering certain models have been told to wait 3-6 months for delivery.
He said all manufacturers are facing difficulties because of supply chain disruptions. If there had been enough cars for prompt delivery, sales would have been much higher.
In late 2021, the luxury car market became busy again with a lot of models introduced to prepare for the 2022 sale season.
In December 2021, Volvo Car Vietnam launched a collection of six new models. The XC60 Recharge, V60 Cross Country and S90L Inscription showed significant improvements.
XC60 Recharge is outstanding with an engine for petrol and electricity and capacity of 408 horsepower. V60 Cross Country is equipped with off-road mode and has a capacity of 250 horsepower. It is a mid-size luxury sedan.
In January 2022, Lexus introduced the F brand in Vietnam with three models bearing the F Sport badge, including IS 300 F Sport, ES 250 F Sport and RX 300 F Sport. All F Sport versions are about VND100 million more expensive than standard versions. The three models have retail prices of VND2.56 billion, VND2.64 billion and VND3.3 billion, respectively.
Mercedes Benz Vietnam in late April introduced six strategic product lines for 2022. These are favorite models and selling well in the world, namely the next-generation C-Class, Maybach S 450, Maybach GLS, AMG GLA 45S, AMG SL and EQS, an electric car.
The biggest obstacle for luxury cars in Vietnam is the high luxury tax in comparison with less expensive cars. The products mostly target high-income earners.
Luxury cars with a cylinder capacity of 3.0-6.0L are taxed 90-160 percent. However, analysts said the number of wealthy in Vietnam has increased rapidly and the luxury car market has a lot of potential.
The Wealth Report 2021 released by Knight Frank showed that Vietnam has 390 ultra-wealthy people. It is expected that the growth rate of the ultra-wealthy community in Vietnam will be 31 percent by 2025, which means that about 511 people will have assets worth over $30 million and 25,800 more than $1 million. This means that the targeted clients of luxury cars would increase rapidly.
Analysts say that luxury goods purchasing power has recovered and the luxury market will be very bustling in H2, especially in the last months of the year. The luxury car market is forecast to increase by 8-10 percent compared to 2021 thanks to the economic recovery.