Vietnam’s car market is facing an oversupply of vehicles amid an ongoing price war between manufacturers. The country’s National Statistics Office recently published a report detailing the entry of 57,000 new vehicles in September. This figure includes both domestic output and imports and is 5.4 per cent higher than August’s tally.
SUPPLY INCREASES
Breaking down the figures, domestic production output in September saw a significant increase year-on-year (YoY) of 19.7 per cent. This totalled to 38,700 new units manufactured in Vietnam, the second highest monthly tally of the year so far. Year-to-date, the overall count for domestically produced vehicles amounts to 338,400 new units. Thanks to the efforts of auto manufacturers and boosted production capacity, local production rose a significant 52.7 per cent YoY.
Last month also saw the entry of 18,271 completely built up (CBU) new vehicles into Vietnam’s car market. These imports from September alone are reportedly worth around AUD 616 million. Both volume and value have increased compared to the previous month, by 12.3 per cent and 10.7 per cent respectively. Year-to-date, the total imported vehicles reached 156,92 units and are valued at AUD 5.2 billion.
PRICE CUTS UNDERMINE SALES
Though vehicle production and import are on the rise, sales have taken a downturn due to a price war that began in August. This oversupply of vehicles prompted companies to slash prices to reduce growing inventory and make way for newer models.
In relation to this, VietStock quoted automotive analyst, Tran Minh Hoang: “The current price war is unprecedented in scope. Even leading models are being offered with steep discounts, showing how urgent the pressure is to clear inventories.”
Unlike China’s price war, all brands are slashing prices, EV or not. Toyota, for example, offered waiving registration fees for Veloz Cross and Avanza Premio. Buyers of its other models like the Vios, Yaris Cross, and Corolla Cross may also receive a partial waive of their registration fees. American automaker Ford is also waiving fees for buyers of their Ranger Sport and Wild Trak models. Hyundai, Honda, Subaru, Mercedes-Benz, and Audi have also reduced prices for vehicles from their 2023-2024 inventories. Reports claim that the vehicle discounts go up to VND 550 million or around AUD 32,000.
PRESSURE TO REACH NET ZERO
Sales pressure is increased by government initiatives to direct Vietnam citizens to go low emission by 2026. Prime Minister Pham Min Chinh urged Hanoi to “begin increasing vehicle-related fees registration, license plate issuance, and parking for gasoline and diesel-powered vehicles.” This may also be followed by an end to new ICE vehicle registrations in low-emission zones in Hanoi.
Local EV manufacturer VinFast is on the receiving end of this shift as the brand continues to be the country’s top-seller. Still, the brand is struggling to replicate its domestic success in international markets.
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