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Paradox of Vietnam’s automobile sales
The economic recovery has resulted in an increase in consumer speeding for some products. However, this raises concerns in some key industries including automobiles.
During the first 8 months of this year, automobile sales increased by 50 percent. Sales of GMN Daewoo, Vinastar, Mercedes and Toyota increased by 66 percent, 172 percent, 23 percent and 18 percent respectively. The sudden growth was mainly in sales of personal automobiles.
According to the Vietnam Automobile Manufacturers' Association (VAMA), on average, in the first half of a year, a manufacturer can sell only 2,200 sedans. However, the number had surpassed 3,000 by July this year.
The increase of personal automobile purchases suggests wasteful spending by Vietnamese consumers. While people in larger economies like Japan, the US and the EU are having to save their money when purchasing cars or change their taste to green or public transport because of the economic crisis or to protect the environment, many Vietnamese people still choose to purchase luxurious cars.
This spending has led to a substantial lost of foreign currencies used to pay for cars and associated costs, petrol imports, an imbalance in trade, air pollution and a detrimental effect on the country’s infrastructure.
The increase in automobile sales would be good news if Vietnam had a real automobile industry. But after 15 years of introducing various subsidiaries to encourage the domestic industry, Vietnam can only manufacture automobiles by using imported parts from other countries.
The industry’s slow development along with an irrational tax policy forces Vietnamese people to buy cars at inflated, although the country still has avery low average income.
Local material account for 50-60 percent of all vehicles, say the manufacturers. However, these are mainly simple and cheap items and their production does not contribute much to the industry revenue or the state budget.
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