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Auto industry struggles to refuel
Euro Auto general director Huynh Du An seems quieter these days.
He also spends more time at work and does not leave his office in HCM City’s Pasteur Street until the street lights are on.
Euro Auto, Viet Nam’s authorised BMW dealer, is amid its biggest yet price cut with discounts ranging from US$12,000 to $32,000.
War veteran Bui Ngoc Huyen seems to have aged.
The general director of Vinaxuki - the country’s second "Vietnamese brand" auto maker after "Thaco" of Truong Hai - also spends more time visiting his nation-wide dealers.
The man in his 60s does not want to continue to see the about 1,500 brand-new Vinaxuki automobiles parked in the factory grounds as he goes to his office.
SAMCO’s Northern Director Hoa Ngoc Duong has delayed his planned Christmas holiday in Hong Kong with his family. It is not a budget problem, he explains. He cannot go at this critical moment in the market.
Automaker Vinamotor reports 10,000 unsold vehicles and Truong Hai 4,000.
Viet Nam Automobile Manufacturers Association (VAMA) figures show that Viet Nam’s 17 major domestic auto makers sold 5,679 vehicles in October, 37 per cent less than the same month last year.
Futile efforts
A weak economy, a sharp shift away from their most profitable products and a credit crisis that restricts sales has dealt Viet Nam’s automobile industry one of the heaviest blows of its 17-year history.
Detroit’s "big three" auto makers might have asked the United States Congress for $34 billion and numerous other of the world’s auto makers might have reduced their production and sales targets, but Viet Nam’s car makers have to find their own way to stay on the road.
They have to figure their own amount of discount to potential buyers.
German luxury maker Mercedes Benz Viet Nam cut its fleet price from 5 to 10 per cent earlier this month and GM-Daewoo its retail price from 1.4 to 5.2 per cent.
Kia brand assembler, Truong Hai Motor, cut its price from $300 to $3,000.
Toyota Viet Nam has established the Toyota Viet Nam Finance Company to provide credit for potential buyers and China’s Lifan pays 50 per cent of the registration fee.
Their effort seems to be proving futile.
Most showrooms surveyed by Viet Nam News reported a further slump in November, although VAMA has still to publish its monthly figures.
More to come
Slumping consumer confidence; recession and the worsening credit crunch are likely to keep buyers away from showrooms at least until the middle of next year.
Car dealers tell Business Banter that potential buyers have delayed their purchases to redirect their money to other purposes.
"A number of potential buyers, including some who had provided a deposit, postponed buying because of the severe financial crisis," explains a senior sales representative with the prominent Ha Noi importer, Quy Hanh.
Financiers who have tightened their lending standards, or withdrawn from the auto market altogether, are also making it tough to sell new cars.
Embattled banks are more focused on their own survival.
"The market will not bounce back without a co-ordinated national effort to turn this economy around," says SAMCO’s Hoa Ngoc Duong.
The Central Institute for Economic Management forecasts the crisis - among the harshest in the nation’s history, will persist until at least June.
The Government has reduced its target for economic growth from 8.5 per cent last year to about 6.5 per cent for this year and the next – although some economists forecast it will be below 6 per cent next year.
Toyota Viet Nam’s spokesperson Phan Hong Hai told Viet Nam News late last month that accurate forecasts were difficult because the market was always changing and much depended on Government policy and customer behaviour.
But Government policy does not seem the major problem in a market mostly hostage to a recession-driven economy and where customer behaviours are more governed by their empty pockets rather than the attractiveness or utility of automobiles.
VNS
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