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Vietnam’s automobile market – The fastest-growing in Southeast Asia

Vietnam’s automobile market – The fastest-growing in Southeast Asia

Wednesday 07, 12 2022
According to AAF, Vietnam's car sales after 10 months of 2022 are the highest in the region. The country is also the fourth largest automobile manufacturer in Southeast Asia.

Topping in automobile sales

Vietnam's sales of 322,963 cars after 10 months of 2022 are equivalent to an increase of 52.2%, the highest in the region, according to the ASEAN Automotive Federation (AAF).

Vietnam's consumption of 322,963 vehicles is the statistics of the Vietnam Automobile Manufacturers Association (VAMA), including sales of firms belonging to this organization and other importers. Sales of VinFast and TC Motor, which distribute Hyundai cars, are not included.

After the first 10 months of 2022, Indonesia is still the largest market for new cars, with more than 850,000 vehicles. Following are Thailand and Malaysia. Vietnam ranks fourth regarding new car consumption and has the highest purchasing growth rate, up 52.2% over the same period in 2021.

Vietnamcredit automoblie consumption

With the third largest population in the region, after Indonesia and the Philippines, and the highest growth in automobile consumption, Vietnam is considered a market with great potential in the coming years. According to VAMA's statistics, sales reached nearly 333,000 vehicles by October. If maintaining stable growth like the past two months, sales for the first time in 8 years, since it was calculated in 2014, may exceed 400,000 vehicles.

Singapore and Myanmar are the two markets with negative sales growth, at negative 30.1% and negative 14.5%, respectively. While Malaysia, the third largest market for new cars in the region, has a sales growth rate of 50.7%, lower than Vietnam.

New car consumption after 10 months of 2022 of the seven Southeast Asian markets mentioned above reached more than 2.8 million units, up 34.7% over the same period in 2021.

Fourth largest automobile manufacturer in Southeast Asia

According to the General Statistics Office data, the output of assembled cars in Vietnam after 10 months of 2022 reached 362,500 vehicles, an increase of about 16.4% compared to the same period in 2021.

In the passenger car segment, many automakers set up factories manufactured in Vietnam, such as Toyota, Honda, Ford, Kia, Hyundai, Mazda, VinFast, Mercedes, etc. The growth in the number of locally assembled cars is a good sign that the domestic auto industry focuses on domestic production instead of importing cars to sell as in previous years.

Vietnamcredit automakers

Vietnam's automobile manufacturing volume of more than 360,000 vehicles ranks fourth in Southeast Asia. According to data from AAF, Thailand is still the largest car manufacturer in the region, with nearly 1.6 million units. Vehicles from this market, aside from serving domestic demand, are also exported to many countries in Southeast Asia, including Vietnam. Car models imported from Thailand sell well in the domestic market, such as Toyota Corolla Cross, Mitsubishi Attrage, etc.

Ranked below Thailand is Indonesia, the largest new car consumption market in the region. The country of thousands of islands has produced more than 1.2 million vehicles after 10 months in 2022.

Like Thailand, Indonesia is also where many companies set up car factories to serve domestic and export markets. Vietnam is considered the "golden land" for cars made in Indonesia, with many best-selling models such as Mitsubishi Xpander, Toyota Veloz, etc.

Malaysia ranks right above Vietnam in terms of domestically produced cars. This country has an output of more than 560,000 vehicles after the past 10 months. Unlike Thailand and Indonesia, two countries with no car brands, Malaysia has Perodua and Proton with the leading market share in the domestic market.

Domestic production is one of the factors shaping a country's automobile industry. Domestic production can serve only the domestic market, export, or both. Vietnam's automobile manufacturing industry has a low localization rate and mainly sells within the country.

The order of output ranking shows that Vietnam's automobile industry has not been able to break through compared to the other three large automobile factories in the region. However, experts in the industry predict that Vietnam's domestic automobile production will increase in the coming years, possibly surpassing even Malaysia. The reason is that the demand for car consumption is growing well, the basis for manufacturers to increase production output. Besides, some new firms, such as Skoda (Sweden) and Chery (China), are planning to assemble cars in Vietnam in the next 1-2 years.

Uncertainties in the market in the remainder of 2022

According to VAMA, sales of VAMA member units in October 2022 reached 36,560 vehicles of all types, up 9.3% over the previous month and 22.7% higher than the same period in 2021. This growth data show that the Vietnamese automobile market is entering a period of strong consumption at the end of the year. However, while the supply is small, and the demand increases, it is understandable that car prices would likely not reduce by the end of the year.

Vietnamcredit VAMA

Many experts believe that the lack of components, high logistics costs, and fluctuations in foreign exchange rates also directly impact car prices. Not only that, but a problem also affecting domestic car prices for a long time is the problem of low localization rate, so most components must be imported.

Meanwhile, automobile production and assembly must import components and spare parts and use USD for payment. Therefore, the rising exchange rate is increasing production costs and putting pressure on car prices.

For importers, when the USD price increases, input costs will inevitably increase, leading to an increase in output because businesses struggle with the exchange rate difference.

 

Compiled by VietnamCredit

 

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