According to the Vietnam Automobile Manufacturers Association (VAMA), sales for the entire market in April were at just 24,350 for vehicles of all types, down 11 per cent on-month, and up 9 per cent on-year.

In the first four months of 2024, sales of the entire market reached 82,515 units of all types, down 11 per cent on-year, of which, completely knocked down (CKD) cars decreased by 17 per cent, and completely built unit (CBU) cars went down by 3 per cent.

TC Motor revealed that Hyundai car sales in April 2024 hit 4,276 units, almost 300 units lower than in March and April of last year. In the first four months of this year, Hyundai car sales reached 14,420 units, a sharp decrease compared to 19,328 units in the same period last year.

Market scale is struggling to grow at a decent pace because of income levels, taxes, and other issues, photo Le Toan

Other car manufacturers also reported decreasing on-year sales in the first four months of 2024. Toyota reduced by 32 per cent, Hyundai by 25 per cent, Kia by 22 per cent, Lexus by 14 per cent, and Mazda by 13 per cent.

“There are many burdens in the economy and business activities, consumers are still cutting down on spending, so the car business is not thriving,” said Tran Trung Hieu, a showroom owner in Nam Tu Liem district in Hanoi. “Demand for new cars is poor, while that of used cars is better.”

According to the General Statistics Office, sales of CKD and CBU cars in the first four months of 2024 are estimated at 88,300 and units, respectively.

Thus, the total supply of new cars in the market was estimated at more than 133,000 units, in combination with about 65,000 vehicles in inventory from 2023, so the total supply this year is nearly 200,000 units. Meanwhile, businesses estimate total market consumption in the first four months at nearly 130,000 units of all types. Supply is nearly 70,000 units higher than demand.

Due to excess supply and a lot of inventory, businesses and agents are announcing promotions and reduced prices to clear sales. Numerous car models from luxury to affordable cars have been discounted by thousands or tens of thousands of US dollars. However, sales are still not improving much, and the vehicle market is still in the recession.

Moreover, sales of CKD cars in the first four months were 21,000 units lower than in the same period last year, and 62,700 units less than in the first four months of 2022.

“This also means that domestic car manufacture and assembly is still falling sharply. The auto industry is losing development motivation,” said Ninh Huu Chan, VAMA general secretary.

Economic difficulties, along with strong competition from imported CBU cars, have caused the backward growth for CKD cars. It is unlikely that the output of CKD cars will surpass the figure of 350,000 units in 2023.

“For the auto industry, maintaining capacity and growing steadily can be impetus for development. As manufacture growth regresses, the driving force for development is no longer there,” Chan said.

Amid this gloomy market, the prime minister recently assigned the Ministry of Finance to consider and propose extending the tax payment deadline and reducing registration fees for CKD cars.

If approved, these cars will be able to continue receiving a 50 per cent registration fee support in the second half of this year. On three occasions during 2020-2023, CKD cars enjoyed 50 per cent registration fee policy that lasted six months each.

The auto market is expected to become more open. Currently, the import tax on CBU cars from the ASEAN region to Vietnam has been reduced to zero. The import tax on CBU cars from the European Union, the United Kingdom, and Japan will also do so by 2030, and thus domestic manufacture and assembly is gradually losing its advantage.

“Domestically manufactured and assembled vehicles have too few chances to grow in the coming years,” Chan said. “If output is maintained at low levels, the country’s auto industry cannot overcome its disadvantages or utilise its advantages.”

While people’s income is not high, cars with fewer than 10 seats take on many taxes and fees, including import tax, special consumption tax, VAT, and more, so market scale is struggling to grow quickly, Chan added.

“To develop the industry, the most important factor is large output. So stable and long-term support solutions are needed to create competitiveness for domestically manufactured cars,” Chan said.