Friday, December 13, 2024 12:29:36 AM - Markets closed
VN-INDEX 1,267.35 -1.51/-0.12%
HNX-INDEX 227.99 -0.19/-0.08%
UPCOM-INDEX 92.68 -0.06/-0.07%
Vietnam’s auto sector faces difficulties after 50% registration discount ends
vietnamnews - 12/11/2024 9:46:28 AM
 (0 ratings. You must sign in to rate.)

The expiration on December 1 of the 50 per cent reduction in registration fees for domestically produced and assembled cars has raised concerns about a potential downturn in the market.

Car manufactuters run a race to offer incentives for buyers as Tết festival comes near. — Photo courtesy of Honda Vietnam

The expiration on December 1 of the 50 per cent reduction in registration fees for domestically produced and assembled cars has raised concerns about a potential downturn in the market.
 
Domestically produced vehicles, which benefitted most from the fee reduction, are expected to face challenges in maintaining sales momentum. The final months of the policy were marked by heightened market activity, with customers rushing to capitalise on the incentives. Many even signed contracts to secure benefits, though they would only receive vehicles after the policy ended.
 
The 50 per cent reduction in registration fees for domestically produced and assembled cars under Decree No. 109/2024/ND-CP provided a significant boost to Việt Nam's automotive market from September 1 to November 30, according to local car experts.
 
This initiative, aimed at stimulating domestic car sales, led to a surge in demand as customers took advantage of reduced costs combined with promotional offers from major manufacturers like Honda and Toyota. Popular models such as the Honda City, CR-V and Toyota Vios saw increased sales due to additional discounts and incentives.
 
The combination of the registration fee reduction and manufacturers' aggressive promotional strategies led to a remarkable sales spike during September and October. However, the post-incentive period may test the resilience of the domestic automotive industry, requiring further strategies to sustain growth and address the predicted decline.
 
Data from the Vietnam Automobile Manufacturers Association (VAMA) reveals a strong growth in Việt Nam's car sales in September and October.
 
Total car sales reached approximately 60,000 vehicles in October, achieving a 10 per cent increase compared to the month before. In September, over 55,000 vehicles were sold, up 30 per cent compared to August.
 
Domestically produced cars benefited significantly from a 50 per cent reduction in registration fees, helping customers save between VNĐ17 million and VNĐ235 million per purchase.
 
Challenges ahead
 
A recent report from the General Statistics Office highlights significant trends in the automotive market for the first 10 months this year, with the output of domestically produced and assembled cars reaching 281,400 units. This marks a 12.1 per cent increase compared to the same period in 2023. Meanwhile, the number of imported cars totalled 143,084 units, indicating a substantial 37.8 per cent increase year-on-year.
 
Many businesses report that inventory from 2023 remains largely unsold, indicating a slowdown in demand. The recent 50 per cent reduction in registration fees is only applicable for three months, which may not provide enough motivation for consumers to purchase.
 
To address the surplus and stimulate sales, car manufacturers and dealers are implementing aggressive incentive programmes. These programmes are essential to encourage purchases and reduce excess inventory. Sales for the first 10 months of the year were around 380,000, indicating a surplus of about 100,000 vehicles. Meanwhile, many businesses are grappling with unsold inventory from 2023 as well.
 
The temporary 50 per cent reduction in registration fees prompted car manufacturers and dealers to offer substantial incentives to stimulate sales and reduce inventory.
 
After the policy ends, a sharp decline in sales of domestically produced cars is expected. The demand spike from September to November, driven by incentives, may lead to a drop-off in December 2024.
 
Domestic manufacturers will face increased competition from imported vehicles. The influx of new car models and upgraded versions will further challenge local producers.
 
In 2024, the expected output for domestically produced and assembled cars is over 350,000 vehicles, reflecting minimal growth from 347,400 vehicles in 2023. In contrast, imports are anticipated to rise significantly to over 180,000 vehicles, up from 118,942 in the previous year.
 
The growth of imported vehicles illustrates their increasing competitiveness, complicating efforts to reclaim market share for domestically produced cars.
 
Experts warn that the end of the 50 per cent reduction in registration fees may lead to a challenging phase for the Vietnamese car market. Domestic manufacturers will need to innovate and adapt their business strategies to maintain market presence.
 
The ability to balance supply with market demand and implement flexible strategies will be crucial to navigate this evolving landscape. The industry's adaptability will be a key determinant of its success in the future. — VNS
 
Read original article here
Newer News
12/12 Standard Chartered forecasts US dollar trends and highlights Vietam’s positive but cautious outlook in 2025
12/12 NA Standing Committee gives nod to the foundation of an investment support fund
12/12 Ninh Thuan nuclear project seen as development driver
12/12 Vietnam’s coffee exports possibly surpass $5 billion for first time
12/12 PM issues directive on e-invoice implementation
12/12 MoIT sets export growth at 6% in 2025
Older News
11/12 Overseas investment soars by 51.6 per cent in 11 months
10/12 Vietnamese cashew seizes growth opportunities in the UK with UKVFTA advantages
10/12 Vietnam, Cuba enhance cooperation in rice production
10/12 PM issues directive on accelerating national green growth strategy
10/12 Plastics demand growing, says industry association
10/12 Real estate demand for e-commerce and logistics rises in Vietnam
10/12 Only 10 per cent of businesses ready to report carbon emissions
09/12 Vietnam expected to create hi-tech breakthroughs following partnership with NVIDIA
09/12 Vietnam to develop yachts services as a signature tourism product
07/12 AI helps people achieve balance in their lives: expert
 
Newsletter Signup
Top Stories
VCCI recommends mineral mining rights be granted through auction and bidding
Central bank works to raise interbank rates and ease forex market
Inflation a concern following salary increases
National Council for Sustainable Development established
Việt Nam, Cambodia look forward to $20 billion trade
Market Update
Last updated at 3:05:01 PM
VN-INDEX 1,267.35 -1.51/-0.12%
Real-time chart
Top 5 Actives
Top 5 Gainers
Top 5 Losers
My Favorite Quotes
Company Research
Type in the symbol above for thorough background information, key statistics and financial information.
Stock Sectors
We continuously improve our services, here are the latest updates...
Portfolio
Allow you to monitor a customised group of securities. You can set up multiple Portfolios to help you better manage your investments.
Trigger Alerts
Get up-to-date alerts delivered directly to your email address.
Stock Screener
Allow you to filter the market and find exactly what sort of company you are looking for.
Live Terminal
Get instant access to FREE REAL-TIME streaming quotes for hundreds of stocks from HOSE, HNX and UPCOM exchanges.