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National economy having difficulties, cars on sale
An oil-engine 2.0 CRDi MLX Santa Fe by Hyundai, which was sold for $52,000 one year ago, is now selling for only $42,000. Car dealers said that they are trying to sell cars at a loss to clear large overstocks.
Car prices decreasing…
Ford Vietnam has announced car price reductions for December 2008. All of Ford’s models, including the Focus, Everest, Ranger and Transit, but not Mondeo, will see price reductions of between $1,000 and $5,000.
The price of the Focus model will see a price reduction of $3,000-5,000/unit, while the price of the Everest and Ranger will see a reduction of $1,500/unit, and the Transit, a commercial vehicle, will be reduced by $1,000/unit.
Ford Vietnam’s sales agents have also announced their own price cuts. Some sales agents in Hanoi are offering price reductions of $1,600/unit for the new-generation oil-engine TDCi. As such, customers nowadays can buy the Everest model car at a price that is lower by $3,100/unit compared to the previous manufacturer’s suggested retail price of $36,000/unit.
Mercedes Vietnam proves to be the manufacturer offering the sharpest price decreases. Clients who purchase C-class versions during the month of December will enjoy a discount of 10%. C 200K Elegance is now priced at $56,610/unit instead of $62,900, while C200K Avantgarde is priced at $58,410/unit instead of $64,900, and the C230 at $67,410 instead of $74,900.
Other manufacturers have not made official price reductions, but clients can negotiate the sale prices with sale agents. A client related that he successfully purchased at Honda Civic at a price that was down by $2,000/unit.
Import models prove to see sharper price decreases than domestically assembled products.
Euro Auto, the distributor of BMW, announced on November 18 the sharp cuts in sale prices of seven out of 10 models. The sharpest decrease of $32,000 has been applied to the Sedan 530i model, while the decrease of $24,700/unit has been announced for the X5, and a decrease of $20,000/unit to the M3 model.
According to Huynh Du An, General Director of Euro Auto, the Euro/VND exchange rate has been decreasing sharply, to VND 21,000/Euro1 right now, which means the import tax fee that the company has to pay has decreased. Therefore, the company has decided to lower the prices by another $1-7,000/unit.
Toyota Camry 2.4L, imported from the US, was previously sold at $58,000, but is now priced at only $53,000/unit, just $2,000/unit more than the domestically assembled Camry 2.4L.
Ha Minh Tuan, General Director of Hyundai Motor Vietnam, said that with the price of $42,000 for a Santa Fe, oil engine, 2.0 MLX, import companies have been incurring heavy losses. He paid due to debts.
… and will decrease further?
Sales agents and importers all said that with the current sale prices they are incurring losses, and therefore, it is not likely that the prices will go down further.
Nevertheless, an importer said that he would rather bargain away cars to get back money, than keep cars in stocks. The importers now prioritize earning back money to pay bank loans, while analysts have warned that if they are slow in selling cars, they would suffer bigger losses, as the average sale price will drop by 5% more from now until the end of February 2009.
The lower sale prices have helped push purchasing power. An, from Euro Auto, said that the sale number of BMW increased by 50% in November over the previous month (30 cars sold in November). GM Daewoo said that the number of sold cars in November was 200 units higher than October, from 435 to 629 units. However, most automobile manufacturers have reported sale decreases in the last month.
According to the Vietnam Automobile Manufacturers’ Association (VAMA), 16 its members sold 5,174 cars of different types, a decrease of 49% from November 2007 and 505 units from October.
An said that the current sale prices are at the lowest levels, which will only exist until the end of February 2009, at which time new changes will be seen.
In 2009, importers and manufacturers, anticipating the difficulties of the national economy, will import fewer cars and car parts for domestic assembling. This spells that the number of cars to be marketed will be smaller, making it impossible to see car prices falling down further.
However, analysts still see the possible price decreases for some car models. Five-seaters, with a cylinder capacity of less than 2.0L, will see prices decreases as the luxury tax on the models will be 45%, as of April 1, 2009, instead of 50%, which will force the car prices down.
According to the Ministry of Industry and Trade, two products that have seen the sharpest import decreases in 2009 will be complete built unit (CBU) cars (down by 19.2% in volume and 15% in value) and car parts.
Tran Thuy
Vietnamnet
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