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Car prices escalating on more expensive dollar, car sales slow down
Sharply increasing car prices following the dong/dollar exchange rate adjustment are taking the car market by storm. However, the price increases are not making traders happy.
Raising retail prices – the last choice
Two automobile manufacturers with large market shares in Vietnam, Toyota and Hyundai Thanh Cong, triggered the new wave of price increases by raising their car sale prices by 10-100 million dong. While Toyota announced that the price increase will become valid as of March 1, Hyundai Thanh Cong raised prices as of February 11, right after the exchange rate was adjusted.
After that, two other manufacturers, GM Daewoo and Truong Hai also announced price increases. The domestic manufacturer announced a lower price increase of four percent, while GM Daewoo announced a sharp price adjustment of 7.2 percent.
Representatives from automobile manufacturers say that the price increases are unavoidable, because the dollar value has increased sharply against the dong. On February 11, the State Bank of Vietnam raised the interbank exchange rate by 9.3 percent from 18,932 dong per dollar to 20,693 dong per dollar, while narrowing the dollar trading band from +/-3 percent to +/-1 percent.
Bui Van Hung, Deputy General Director of Hyundai Thanh Cong, said that every imported car will bear higher costs due to the sharp dollar price increase, and the additional costs may be up to 100 million dong.
Tran Tan Trung, General Director of Lien A International, the official distributor of Audi in Vietnam, also said that the higher price of the dollar will make cars more expensive since importers have to pay dollars for the imports. However, some manufacturers and distributors have offered car price increases lower than the dollar price increases. Meanwhile, some others are delaying sale price adjustments.
“If the dollar price remains expensive, we will surely have to raise sale prices. However, we still wait for the exchange rate to become stabilized to adjust the sale prices, because we do not want to disturb our business plan,” Trung said.
To date, four automobile manufacturers have announced adjusted manufacturers’ suggested retail prices. However, according to Thoi Bao Kinh Te Vietnam, many sales agents of other manufacturers have also raised retail prices even though the manufacturers have not made any official announcements yet.
Ford’s and Mercedes’ cars have been selling at the new prices. Ford Everest XLT, for example, increased by 52 million dong to a new sale price of 791 million dong, and the Ford Focus 1.8AT 5 increased by 41 million dong to a new sale price of 620 million dong.
The problem is that though the car prices are quoted in Vietnam dong, the convention between manufacturers and sales agents is that the car prices are set up based on the dollar. Therefore, when the dollar price increases, sales agents automatically raise the Vietnam dong prices.
Car market quiet
While the dollar market is dancing, the car market is quiet because of the overly high prices of the dollar.
Thu Huyen, a marketing director of Toyota Hoan Kiem said that business is getting worse. Previously, a team of three people could consult 10-12 people and many people came to buy cars. These days most visitors only ask about prices and they do not make purchases.
“Everyone says they want to get cars in February in order to avoid the price increases. However, all the cars have been ordered, and those who place orders now will have to pay the new prices,” Huyen explained.
Cuong from Thang Loi Auto Showroom also thinks that the car market will be quiet for some more time, and people will only look to buy cars when the prices become stable.
vietnamnet
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