In fact, Vietnam’s automobile market has changed as there are not only dozens of brands to choose from, but the habits of domestic consumers have also changed dramatically. Vietnamese people are no longer just interested in popular car brands nor in the ability to maintain high price of the brand.
In previous years, most Japanese-branded cars were highly appreciated by consumers for their durability and high reselling price. Thanks to that, models of Toyota, Honda were favored. Notably, when it comes to motorcycles, people will mention Honda and when it comes to cars, Toyota is a household name.
In the last few years, Toyota's leading position in Vietnam's automobile market has been threatened, as its fellows have caught up with rapidly changing consumer trends of Vietnam which required products that are not only durable but also more beautiful and 'fashionable', equipped with many other amenities, etc.
Korean car brands such as Hyundai and Kia have not only improved their durability, but also significantly changed their models, designs, which are considered as weaknesses of some Japanese automakers. Along with that, these automakers also increased the support to install many convenient accessories at competitive prices, which has helped the market share of these two automakers from the land of kimchi increase dramatically in recent years.
The business results of 2019 show that although Vietnam Automobile Manufacturers' Association (VAMA) stated that Toyota is the brand with the most cars sold with a total of 79,328 vehicles, this is only the leading position among the members of VAMA.
In fact, Toyota's market leader position in the domestic market was overtaken. According to the report of TC Motor (not a member of VAMA), which distributes and assembles Hyundai car in Vietnam, sales of Huyndai cars reached 79,568 units, an increase of 25% compared to the previous year (the overall increase of the market is only 12%), which is 240 units higher than Toyota.
However, considering passenger cars only, the Toyota brand last year still led the domestic market with sales of 78,795 cars (excluding Toyota Hiace - commercial vehicles). Meanwhile, excluding commercial vehicles with 9,652 vehicles distributed by TC Motor, the remaining Hyundai car brand sold last year was 69,916 units, ranked second. Although Huyndai still lags far behind Toyota by more than 10,000 passenger cars, the growth rate of Toyota in the past year was only 20%, while that of Hyundai was 25%.
In this context, analysts believe that the ability to “hold the throne” of Toyota in Vietnam’s market is no longer safe if Toyota is slow to change or has no new business strategy.
Many people believe that the number of more than 322,000 cars sold by the Vietnam Automobile Manufacturers' Association (VAMA) recently is the scale of the domestic automobile market. However, this is not the final result because the sales result provided by VAMA is only a summary of the sales of its members, while there are still a number of other assembly and trading enterprises that are not members of VAMA which also have very significant sales, such as Hyundai with nearly 80,000 cars.
Recently, domestic automobile assembler and manufacturer VinFast (not a VAMA member) also announced its general sales figures in 2019 which was more than 17,000 cars. VinFast has just officially entered the automotive market with Fadil cars of A segment and Lux cars of E segment, including two models Lux A2.0 (sedan) and Lux SA2.0 (SUV). Total orders received by VinFast for all three models were 17,214 units, of which 15,300 were manufactured.
Therefore, VinFast and TC Motor have contributed nearly 100,000 cars to the market in 2019, bringing the total number of cars sold in the market to about 419,000 vehicles. That is not to mention a number of other imported CBU car brands such as Audi, Volkswagen, Bentley, Porsche, BMW, etc. In fact, the sales of each of the above brands is not much. However, if include all the car brands, the size of the domestic market may have reached 430,000 to 435,000 vehicles, which is a record.
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According to experts, although Vietnam's car consumption has increased, the scale is still modest compared to regional countries such as Thailand, Indonesia, Malaysia and the Philippines. Thailand currently has an output of more than 2.5 million vehicles and consumes nearly 2 million vehicles per year. Indonesia also consumes millions of vehicles a year. Vehicle consumption in Malaysia and Philippines is lower but still higher than Vietnam.
With small market size, high production and assembly costs, domestically assembled cars still cost from 10% to 20% higher than other countries in the region. Therefore, these are factors that create barriers to Vietnam’s car market.
Notably, the desire to own a car with affordable prices of Vietnamese people has not yet come true because although the price of cars in Vietnam has decreased, the reduction is very low and people still have to spend years of income for a car.
Regarding imported car market, import tax of cars imported to Vietnam from countries like Thailand and Indonesia are mostly 0%. However, dealers often raise the price of these cars to maximize profits. On the other hand, excise taxes are also high, along with other fees that also make it difficult for many Vietnamese people to own cars.
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Compiled by VietnamCredit