Auto business recovers thanks to the government's stimulus policy

VCN - The supportive policies of the Government have helped many automobile companies prosper with good results.
Importing more than 7,000 CBU cars in first half of October Importing more than 7,000 CBU cars in first half of October
Gov’t asked to help automakers overcome difficulties Gov’t asked to help automakers overcome difficulties
2701-0934-9-4303-l-1505264937
The State's supportive policies on taxes and fees have helped reduce the total cost of buying a car, stimulating demand.

Profits soared

According to the Vietnam Automobile Manufacturers Association (VAMA)’s report, the total sales of VAMA members as of the end of September 2020 reached 172,537 units, a decrease of 21% compared to the same period in 2019, and significantly narrower compared to a drop of 30% at the end of June 2020.

The positive signs in the market are also consistent with the business results of the third quarter of 2020 just announced by listed companies. Typically, the Hang Xanh Automobile Service Joint Stock Company (HAX). By taking full advantage of the opportunity when the 50% reduction in registration fees for domestically assembled vehicles came into effect, all four HAX dealers have exceeded their sales target and are among the top Mercedes-Benz car sales.

The consolidated net revenue in the third quarter reached VND 1,741 billion, up 31% over the same period in 2019; profit before tax reached VND64 billion, 3.5 times as much as in the third quarter of 2019. In the first nine months, HAX achieved VND 80 billionof pre-tax profit, up 43%.

Meanwhile, TMT Automobile Joint Stock Company benefits from the increased disbursement of public investment capital, leading to increased investment in buying trucks. Specifically, net revenue in the third quarter of 2020 nearly doubled that of the same period in 2019, reaching VND 501 billion. In addition, financial expenses and selling expenses both decreased by 11% and 29% respectively, so profit after tax recorded a growth of 207%, reaching VND284 billion. In the first nine months, TMT reached VND1,359 billion of net profit, up 94% over the same period in 2019.

The secondquarter 2020 consolidated financial statements for the 2020-2021 year of Hoang Huy Financial Services Investment Joint Stock Company (TCH) also recorded positive results when exceeding the annual plan after only six months.

Specifically, in the second quarter of this year, TCH reached VND 1,937 billion in revenue, four times higher than the same period last year. After deducting expenses, the company pre-tax profit is VND564 billion, 2.5 times higher than same period last year. In the first six months of the year, pre-tax profit reached VND808 billion, up 162% and exceeded VND8 billion compared to the plan for the whole year.

According to Ms. Tran Thi Hoang Hoa, General Director of TCH, in the second quarter of this year, both of the company's core areas of auto trading and real estate project development have achieved high efficiency.

In particular, in the commercial vehicle segment, from making a new wave of FDI investment in Vietnam, many multinational corporations have promoted plans to move factories from other countries to Vietnam, leading to increased transport demand. This has helped the sales of US Navistar tractors soar to more than VND500 billion, equivalent to 211% over the same period last year.

Since the beginning of the year, the State has issued three supporting policies for the domestic auto industry. That is Decree 70/2020/ND-CP on the reduction of50% of registration fee for domestically manufactured and assembled cars, effective from June 28, 2020 to December 31, 2020. In addition, from July 10, 2020,Decree 57/2020/ND-CP amending and supplementing a number of articles of Decree 122/2016/ND-CP allowing enterprises to manufacture and assemble domestic cars will be entitled to 0% import tax on raw materials, components and supplies that cannot be produced domestically. Therefore, production costs were reduced by 2-2.5%.

The Government also allowed an extension of the deadline for paying special excise tax on domestically manufactured or assembled cars with respect to accounts payable from March to December 31, 2020.

The above policies have helped reduce production costs and service costs, thereby reducing the total cost of buying cars, stimulating demand.

Along with that, GDP in the third quarter 2020 increased at 2.62% after only 0.39% growth in second quartershowed the recovery of the economy as well as people's income. In fact, sales of domestically assembled cars have grown in July, August and September after the 50% reduction in registration fees took effect. It is expected that car sales will continue to recover in the fourth quarter of 2020 and 2021.

Being positive

Looking at the domestic car market in the first nine months of this year, Rong Viet Securities said that there was no oversupply situation as in previous years, but the selling price was still decreasing due to efforts to attract customers in the context of low demand for cars. The total supply in the fourth quarter 2020 is expected to reach 127,000 units, while total demand is about 122,000 units. So, in 2020 there will be no inventory.

However, the inventory in 2019 is relatively large with about 85,000 units (accounting for 17% of the total supply in 2019), so the pressure to liquidate the current inventory is still high. Therefore, Rong Viet's experts believe that the fourth quarter of 2020 will be an important time to liquidate before receiving the 2021 models, so agents still have to reduce prices to attract customers.

Therefore, car dealers will still have to reduce selling prices to attract customers. This will cause the gross profit margin of companies to decline. However, overall gross profit will still grow thanks to increased sales. In addition, the recovery demand will also help companies save selling costs.

Auto industry steers strategy towards wider supply chains Auto industry steers strategy towards wider supply chains

Vietnam’s automobile industry is transforming drastically but it still lacks scenarios to join the global supply chains ...

By 2021, the cost of locally assembled vehicles will be lower, thanks to the tax incentive policy for imported raw materials, components and supplies, thereby supporting the selling price. Meanwhile, output is likely to increase when the economy returns to normal with supportive policies from the Government and people's incomes gradually recover.

By KhaiKyQuynhlan

Related News

Complying with regulations of each market for smooth fruit and vegetable exports

Complying with regulations of each market for smooth fruit and vegetable exports

VCN - According to Mr. Dang Phuc Nguyen (photo), General Secretary of the Vietnam Fruit and Vegetable Association (Vinafruit), with the development momentum and increasing consumption demand from the Chinese market, the Vietnamese fruit and vegetable industry is setting new records and is expected to reach an export turnover of US $10 billion by 2030. With great potential and advantages in developing agricultural products, Vietnam has been affirming its position as one of the world's leading agricultural exporters.
Request for price management and stabilization, avoiding unusual fluctuations during Tet 2025

Request for price management and stabilization, avoiding unusual fluctuations during Tet 2025

VCN - Minister of Finance Nguyen Van Thang has just signed and issued Directive No. 05/CT-BTC on strengthening the price management, operation and stabilization during the Lunar New Year 2025.
Six export commodity groups see billion-dollar growth

Six export commodity groups see billion-dollar growth

From the beginning of the year to December 15, there were six key export commodity groups with an increase in turnover of US$1 billion or more, according to the latest statistics of the General Department of Customs.
Automobile localization: rapid development from internal strength

Automobile localization: rapid development from internal strength

VCN - Enjoying many investment incentives for many years, FDI enterprises have failed to fulfill their commitments on the localization rate in automobile production. It was thought that Vietnam would not have an automobile manufacturing industry, depending on imports and stopping at assembly. However, in a short time, with their internal strength, determination and mettle, domestic enterprises have initially affirmed their role and position in the automobile market, with strong development in both quantity and quality.

Latest News

Exchange rate risks need attention in near future

Exchange rate risks need attention in near future

VCN - Exchange rate developments in 2025 are considered to be quite complicated due to US policies related to trade and investment.
Vietnam kicked off the year with a strong start in trade, exceeding US$63 billion in the first month

Vietnam kicked off the year with a strong start in trade, exceeding US$63 billion in the first month

VCN - Data from the General Department of Vietnam Customs indicates a softening of both exports and imports in January 2025, relative to the same month in 2024.
Import and export turnover reaches about US$29 billion in the second half of January 2025

Import and export turnover reaches about US$29 billion in the second half of January 2025

VCN - Vietnam's total import and export turnover in the second half of January 2025 (January 16-31, 2025) reached US$28.9 billion, the latest preliminary statistics of the General Department of Vietnam Customs reported.
Market edges up slightly as liquidity remains low

Market edges up slightly as liquidity remains low

Market breadth remained positive, with 161 gainers outnumbering 144 decliners.

More News

Business regulations must be trimmed for development of enterprises: Experts

Business regulations must be trimmed for development of enterprises: Experts

The General Statistics Office (GSO)'s socio-economic report for January 2025 reveals that while over 33,400 newly established or resumed businesses entered the market - marking a 15% increase compared to January 2024 - more than 58,300 businesses withdrew from the market, representing a growth of 8.1% on year.
Vietnam's agricultural product exports shine in 2024

Vietnam's agricultural product exports shine in 2024

The agricultural sector wrapped up 2024 with 62.4 billion USD in export turnover, marking an 18.5% increase against 2023, while achieving a record trade surplus of 18.6 billion USD, surging 53.1%.
Aiming for 16% credit growth and removing credit room allocation

Aiming for 16% credit growth and removing credit room allocation

VCN - A representative of the State Bank of Vietnam (SBV) said that the SBV is gradually innovating its credit management methods, aiming to remove the mechanism of allocating credit room to each credit institution.
Malaysia initiates anti-dumping investigation on galvanised sheets from Việt Nam

Malaysia initiates anti-dumping investigation on galvanised sheets from Việt Nam

Malaysia has announced it will initiate an anti-dumping duty investigation on the imports of galvanised iron coils/sheets or galvanised steel coils/sheets originating from or imported from Việt Nam, China and South Korea.
Coffee prices hit record highs, heightening speculation risks

Coffee prices hit record highs, heightening speculation risks

Phan Minh Thông, Chairman of Phúc Sinh JSC, called the price surge "insane," warning of continued increases as businesses are compelled to trade at elevated prices instead of following pre-set contracts.
Exports witness a rise of US$1 billion in the first 15 days of 2025

Exports witness a rise of US$1 billion in the first 15 days of 2025

VCN - Compared to the same period in 2024, exports in the first half of January 2025 increased by more than 6%, equivalent to nearly USS$1 billion.
Central industrial hub sets ambitious growth target in 2025

Central industrial hub sets ambitious growth target in 2025

The central province has targeted ambitious growth of up to 10 per cent with some key strategic industrial investment projects in 2025, contributing VNĐ25 trillion (US$1 billion) to the State budget.
Demand for dragon fruit in Tiền Giang Province continues to increase

Demand for dragon fruit in Tiền Giang Province continues to increase

Dragon fruit prices in Tiền Giang Province remain high after the Lunar New Year due to increased demand from China and domestic consumption.
Data centres are attracting investors in Asia

Data centres are attracting investors in Asia

The global data centre market reached new heights in 2024, driven by the growing demand for generative AI, which has triggered a new wave of investment.
Read More

Your care

Latest Most read
Exchange rate risks need attention in near future

Exchange rate risks need attention in near future

VCN - Exchange rate developments in 2025 are considered to be quite complicated due to US policies related to trade and investment.
Vietnam kicked off the year with a strong start in trade, exceeding US$63 billion in the first month

Vietnam kicked off the year with a strong start in trade, exceeding US$63 billion in the first month

Data from the General Department of Vietnam Customs indicates a softening of both exports and imports in January 2025, relative to the same month in 2024.
Import and export turnover reaches about US$29 billion in the second half of January 2025

Import and export turnover reaches about US$29 billion in the second half of January 2025

VCN - The figure decreased by 15.6% (equivalent to a decrease of US$5.33 billion) compared to the figure in the first half of January 2025.
Market edges up slightly as liquidity remains low

Market edges up slightly as liquidity remains low

Market breadth remained positive, with 161 gainers outnumbering 144 decliners.
Business regulations must be trimmed for development of enterprises: Experts

Business regulations must be trimmed for development of enterprises: Experts

The General Statistics Office (GSO)'s socio-economic report for January 2025 reveals that while over 33,400 newly established or resumed businesses entered the market - marking a 15% increase compared to January 2024 - more than 58,300 businesses withdrew from the market, representing a growth of 8.1% on year.
Mobile Version