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Automobile market to freeze or grow?
Opinions have varied about the performance of the automobile market in the last few months of the year. Some predict that the market will freeze due to the policy on tightening purse-strings, while others believe the market will grow.
According to the Vietnam Automobile Manufacturers’ Association (VAMA), 16 its members sold only 5,180 cars in September 2008, a decrease of 2,629 units from August and 33% from September 2007.
This has been the gloomiest period of the automobile market in the last two years, which has made people think that a freezing period of the market has started.
Meanwhile, other experts do not believe that the automobile market will stagnate in the last few months of the year. They explain that the slowdown in car sales during September is because people purchased cars in August already, trying to avoid paying the new ownership registration fee (effective as of August 25).
The experts believe that the automobile market will keep growing in the last three months of the year, as the demand for cars remains high, while manufacturers are trying to stimulate the demand with promotional programs. It is expected that car sales in 2008 would reach the same level as last year, or 120,000 units.
Huynh Du An, General Director of Euro Auto, the distributor of BMW in Vietnam, said that vehicle demand is still high; however, the requirements of clients are lower. For example, previously, with $30,000 in pocket, buyers could demand a car with many facilities. But nowadays, the same sum of money would is only able to pay for a car with fewer facilities. A lot of clients will have to be satisfactory with medium-class cars instead of luxury ones.
An said that automobile manufacturers are well aware of this and have been trying to launch cars with fewer accessories in order to reduce the sale prices and attract clients.
A lot of sales agents have slashed the sale prices themselves, and are accepting a lower commission rate in order to boost sales. Some sales agents have slashed the prices by $1,000-2,000/unit.
An believes that Vietnam’s automobile market maintains potential, which a lot of foreign manufacturers still want to conquer. It is expected that a lot of manufacturers will open sales agents to distribute their products in Vietnam by 2009, when Vietnam opens its retail market.
Some other manufacturers are negotiating to purchase stakes in the market to become strategic shareholders of 100% domestic owned assemblers.
Experts have expressed their worry that the amended special consumption tax law, effective as of April 1, 2009, which imposes high taxes on less-than-9-seat cars, will push the automobile market into difficulties. However, Minister of Finance Vu Van Ninh said that the market is controlled by many other factors as well.
VNN
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