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Demand for Cars Increasing In Vietnam
Jan 25, 2008

The demand for cars is increasing in Vietnam with every passing year because sales prices have reduced significantly and people are shifting from two-wheelers to cars.

Car sales in Vietnam went up by nearly two-time during January–November 2007. Car manufacturers said that that this was pushed by an increasing demand for new passenger cars, reported Forbs.

According to the monthly report by VAMA (Vietnamese Automobile Manufacturers), a 97% rise in car sales was seen during the period, with passenger car sales up by 148%. In November 2007 alone, sales of passenger cars went up to 10,110 vehicles, still marginally small by regional standards. However, this was up by 167% year on year.

The growth for that month came primarily from commercial vehicles with a 235% rise in November 2006, says VAMA. Also, Vietnam, which is a fast-growing economy of 84 Million people, has witnessed emergence of increasing middle-income earners who are shifting from two-wheelers to cars. It has been seen that day by day, more cars, trucks and buses are hooting their way through two-wheel traffic as wages are increasing and road conditions are improving. However, the most remarkable growth is seen in the luxury car segment.

Vietnamese automobile industry was provoked by the government decision to bring down tariffs on imported cars from January 1, 2006. Also, import of used cars and their taxes have decreased, thus fuelling heated competition among car manufacturers. Decreased automobile taxes are primarily attributed to larger imports of vehicles. Vietnam cut down import duty on cars from 70% in August 2007 to 60% in October 2007 as compared to 80% earlier.

As per VAMA, auto manufacturers in the local market have the potential to manufacture 10,000 cars, which they have vowed to deliver by the end of the first quarter of 2008. Many sales agents have denied security money from clients as manufacturers find it difficult to deliver on time.

According to a Research Analyst at RNCOS, “Many customers are now purchasing imported cars in Vietnam. Earlier, it was difficult for people to buy imported cars, as they were quite expensive. However, this is not the case now - all thanks to reduction in tax. The Vietnamese automobile market will continue to be a growing segment in near future because importers are incapable to meet drastically increasing demand. Imports will exaggerate the strain on local automobile manufacturers, thus pushing them to decrease prices further.”

Related Market Research Reports:
Vietnam Automobile Industry Forecast (2007-2010)
Czech Republic Automobile Sector
Brazil Automobile Industry till 2010