A showroom of Hyundai An Khánh ịn Hà Nội. Car consumption in Việt Nam has experienced a deep decline this year, despite various efforts to stimulate sales. — Photo cafef.vn

HÀ NỘI — The domestic auto market in Việt Nam is experiencing a decline in car sales due to sluggish customer demand compared to previous years, despite price reductions and promotions offered by car manufacturers during the peak shopping season, according to local car experts.

The experts said the number of customers visiting car dealerships has not increased compared to previous years.

According to a car sales staff at Toyota dealerships in the central area of Hà Nội, cars priced under VNĐ1 billion (US$40,983) are particularly challenging to sell. They attribute this trend to the difficult economic conditions and the reluctance of people to spend money on purchasing cars.

Anh Đức, a car salesman in Phạm Hùng Street, expressed surprise at the low sales, mentioning that in previous years, they could sell hundreds of cars each month at this time, but recently the numbers have not been reaching even 50 per cent of that.

Many dealers hope that demand for cars will increase at the end of the year and the market will become boisterous; however, it is so far still quiet. In order to reduce their inventory and recover some of their costs, dealers may resort to reducing prices and offering discounts or incentives to attract buyers. In some cases, they may even have to sell cars at a loss in order to move inventory and free up capital.

Car consumption in Việt Nam has experienced a deep decline this year, despite various efforts to stimulate sales such as launching new models, offering discounts, and providing registration fee support and attractive gifts.

Specifically, Toyota Việt Nam has initiated a programme starting from December to offer a 50 per cent discount on registration fees for certain car models. In addition to this discount, there is also a 50 per cent reduction in registration fees for domestically assembled cars as part of the general policy. This policy will be in effect until the end of 2023.

Honda Việt Nam has also announced a 50 per cent registration fee discount programme for all car models on sale starting from December 5. Additionally, domestically-produced and assembled vehicles are still receiving 50 per cent registration fee support from the Government.

As for Hyundai, the Hyundai Stargazer model had a listed price of VNĐ575-685 million ($23,565-$28,073). In November, the price was reduced by VNĐ120-130 million, but it still faced difficulties in selling. In December, the price was further reduced by another VNĐ10 million. Furthermore, the high-end diesel version of the SantaFe model, which was produced in 2022, is being reduced by VNĐ210 million.

The decrease in car purchasing power compared to the same period in 2022 is a concerning trend, especially considering that car sales were lower than during the period when the market was affected by the COVID-19 pandemic.

The statistics from the Việt Nam Automobile Manufacturers Association (VAMA) indicate a significant decline in car sales, with a 29 per cent decrease in the first ten months of 2023 compared to the same period last year, equivalent to the absolute number of 70,000 vehicles.

Among the car manufacturers, Toyota Việt Nam seems to be the most affected, with a 42 per cent decrease in sales during the first ten months of 2023, amounting to nearly 30,300 vehicles. Other brands like Kia, Honda, and Mitsubishi also experienced significant declines, with decreases of 39 per cent, 36 per cent, and 28 per cent, respectively.

Hyundai is another car company facing challenges, with a sales decrease of approximately 25 per cent, equivalent to more than 16,000 vehicles. These figures suggest that the automotive market in Việt Nam is currently facing obstacles and uncertainties.

Economist Ngô Trí Long said that the selling prices of many car models have reached their lowest level in nearly ten years in 2023.

Some businesses and dealers may have hinted at cutting incentives at the end of the year due to anticipated increased demand; however, car discount promotions are still prevalent and becoming even deeper.

The difficulties are expected to continue into 2024. High inventory levels can also be a challenge for auto businesses. If consumer demand is lower than expected, dealerships and manufacturers may face excess inventory, which can lead to increased costs and reduced profitability, according to industry insiders.