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Truck sales decreasing, domestic manufacturers facing big difficulties
Domestic truck manufacturers are complaining that sales have been very slow for the last three months as banks have tightened credit or provided loans with overly high interest rates.
According to the Vietnam Automobile Manufacturers’ Association (VAMA), sales were very good until April 2008. Vinamotor, for example, sold 2,300-3,500 units/months in the first four months of the year, while sales have been decreasing dramatically since May 2008 to 1,265 units a month. Truong Hai sold over 2,000 units a month from January-April, but only around 1,000 units a month since May. The figures are 1,000 units and 500 units for Vinaxuki. In general, sales have dropped by a half in the last three months.
As sales have been going slowly, enterprises all have big numbers of inventory vehicle parts which they imported in late 2007. Vinaxuki said it still has 2,000 sets of vehicle parts in stock, while enterprises belonging to Vinamotor said 10,000 sets of vehicles parts are left.
Satisfactory sales in 2007 prompted domestic manufacturers to import more vehicle parts for domestic assembly in 2008, when the market was expected to gain the growth rate of 20%. However, the manufacturers could not anticipate the difficult situation.
Tran Ba Duong, General Director of Truong Hai Automobile Company, said that a lot of clients cannot purchase trucks as bank interest rates are overly high, at 21% per annum. Meanwhile, the price of fuel and other expenses have been increasing, which makes the profit brought by transport services not big enough to pay bank interest.
Unlike sedans, trucks mainly serve the production and business of enterprises, cooperatives and households as a means of carrying cargo and passengers. If banks do not lend money or lend at overly high interest rates, enterprises and households will not have money to buy trucks, which will surely badly affect the transportation industry, while automobile manufacturers cannot sell products.
Domestic manufacturers are also complaining about the increased production costs of trucks. The higher prices of input materials have pushed the price of every set of vehicle parts up by 15%. The higher exchange rates have made production costs increase by another 4-6%. Higher bank interest rates (0.9%/month previously and 1.5% now) have made production costs increase by another 3-4%. As a result, manufacturers have had to raise sales prices, and this has resulted in a decrease of truck sales.
Bui Ngoc Huyen, General Director of Vinaxuki, said that in such conditions, only the manufacturers who have high localisation ratios can survive the difficulties. Though the production costs of the models manufactured by VInaxuki have increased by 7-10%, Vinaxuki has raised sale prices by 2% only, as the company has a high ratio of locally-made content and has taken initiative in capital arrangement.
VNN
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