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Vietnam Car Sales Grew 49% YOY but Future Looks Dim
Feb 06, 2009

Car sales in Vietnam grew 49% during 2008 against 2007, but 2009 will bring in troubles for the industry as the credit conditions are not favorable for growth.

As per the Vietnam Automobile Manufacturers Association (VAMA), in spite of the continued global financial crisis, Vietnam car sales posted growth of around 49% to 110,000 Units during 2008 against 2007, as reported by Xinhua.

The total sales figures of 16 car manufacturers in Vietnam surged 48% to 100,910 Units during the first eleven months of 2008 compared to the same period in previous year. However, the month of December 2008 saw downtrend, with sales declining 23% to 9,293 Units over the same month last year on account of higher taxes that hit the demand.

Toyota Motor Corp. remained at the top among car manufacturers as it sales surged 21% during the entire 2008 to reach 24,421 Units against 2007. Vinamotor, domestic car manufacturer, occupied the second position by selling 20,887 Units.

Heavy discounts and big promotion programs by car manufacturers pushed the car sales up in 2008. Fall in prices of some car models up to $4,000 raised the affordability level of consumers, which, in turn, increased the car sales.

Moreover, the prospective changes in tax policies also made customers to flock to showrooms in the last month of 2008 as they feared that new tax policies would raise car prices. Hence, people bought cars increasingly to avoid paying extra money on taxes.

Although 2008 might bring cheer to car manufacturers in Vietnam, outlook of 2009 seems gloomy for the domestic car market. The government raised the car registration fees three times to nearly 15% of car’s purchase price with effect from August 2008; thus, the demand is likely to slowdown in 2009. Apart from this, the impact of economic downturn could not be neglected on car sales.

Amidst deepening global financial crisis, Vietnam Automobile Manufacturers’ Association proposed giving tax relief in December 2008 to boost the dwindling sales.

According to a Research Analyst at RNCOS, “Vietnam’s car industry is likely to see tough time in terms of sales during 2009, but the scenario can be improved if the government revokes or reduces the registration fees as the economy is showing signs of sluggishness.”

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