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

Coconut is expected to become a billion-dollar export item

Coconut is expected to become a billion-dollar export item

VCN - Talking to the press at the ceremony to launch the first train carrying fresh coconuts to China, Mr. Luu Van Phi, Director of the Department of Industry and Trade of Tien Giang province, said that Vietnam's agricultural export potential, especially fresh coconuts, is expanding with the appearance of international railway transportation from Song Than station.
Plastic exporters interested in converting to recycling technology

Plastic exporters interested in converting to recycling technology

VCN - The Vietnamese plastics industry is facing major challenges in terms of plastic waste and recycling needs. Secretary General of the Vietnam Plastics Association Huynh Thi My (pictured) shared important information about the transformation in production of plastics enterprises to meet increasing export demands.
Trade Defense: The Key to Success for Vietnamese Businesses

Trade Defense: The Key to Success for Vietnamese Businesses

VCN - From losses and near bankruptcy, many domestic enterprises have recovered thanks to timely application of trade defense measures. Trade defense is also an effective shield for Vietnamese enterprises against a series of lawsuits from importing countries, thereby maintaining advantages and developing on "away grounds".

Latest News

Import and export are expected to reach 800 billion USD

Import and export are expected to reach 800 billion USD

VCN - Although the import and export turnover of goods slowed down in September 2024, in general, import and export activities, especially exports, still grew positively in the first 9 months of 2024. It is expected that import and export of goods in 2024 will reach a record of 800 billion USD.
Fresh coconuts quenching new overseas markets

Fresh coconuts quenching new overseas markets

Vietnam’s fresh coconuts are being increasingly consumed in international markets such as the US, China, and the UK, highlighting a bright spot in Vietnam's fruit export sector with many opportunities for breakthroughs in the near future.
Rice exports likely to set new record in 2024

Rice exports likely to set new record in 2024

Vietnam sold 800,000 tonnes of rice overseas for 505 million USD in October, bringing the country's total export volume and value in the first ten months to nearly 7.8 million tonnes and 4.86 billion USD, up 10.2% and 23.4% year-on-year, respectively.
Vietnamese goods conquer halal market through trust and quality

Vietnamese goods conquer halal market through trust and quality

VCN - According to the Ministry of Agriculture and Rural Development, Vietnam's capacity to export over 50 billion USD worth of agricultural products annually, coupled with established supply chains, provides a significant advantage for Vietnamese agricultural and aquatic products to penetrate the Halal market.

More News

Exporters urged to have strategies to take advantage of UKVFTA for expansion

Exporters urged to have strategies to take advantage of UKVFTA for expansion

The UK is concerned by sustainable development, labour issues, environmental protection and social responsibility. Therefore, when exporting to the UK, enterprises should not just be concerned about being competitive in terms of price and quality.
Fresh coconuts quenching new overseas markets

Fresh coconuts quenching new overseas markets

Vietnam’s fresh coconuts are being increasingly consumed in international markets such as the US, China, and the UK, highlighting a bright spot in Vietnam's fruit export sector with many opportunities for breakthroughs in the near future.
Vietnam and UAE trade sees billion-dollar growth

Vietnam and UAE trade sees billion-dollar growth

VCN - According to General Department of Vietnam Customs by the end of September 2024, bilateral trade between Vietnam and the United Arab Emirates (UAE) reached nearly US$5 billion, an increase of more than US$1.4 billion over the same period last year.
Sharing responsibility for ensuring security and safety of the supply chain

Sharing responsibility for ensuring security and safety of the supply chain

VCN – Post - clearance audit is carried out in a planned, focused and key manner, avoiding widespread and ineffective inspections, thereby creating convenience for the business community and improving the effectiveness of state management of customs.
Many factors affecting tuna exports in the last months of the year

Many factors affecting tuna exports in the last months of the year

VCN - Tensions between Israel and Iran escalate, tuna businesses are worried, they may have to stop export orders to the Israeli market in the last months of the year.
Vietnam still dominates Philippine rice import

Vietnam still dominates Philippine rice import

Vietnam continues to assert its dominance as the top rice exporter to the Philippines, with 2.91 million tonnes shipped as of the late October, or over 79% of the Philippines' total rice imports, according to the Vietnam Trade Office in the Philippines.
Vietnam cements ties with partners to engage in global semiconductor, AI industries

Vietnam cements ties with partners to engage in global semiconductor, AI industries

By boosting cooperation with reputable partners across the globe, Vietnam is taking steps to gain a foothold in the world’s semiconductor and artificial intelligence (AI) industries.
Aquatic exports expected to rise in year-end despite challenges

Aquatic exports expected to rise in year-end despite challenges

Aquatic exports is expected to surge in the remaining months of this year, as the year-end festive season comes, despite many challenges in the international markets, according to insiders.
Lao Cai Customs sees a triple-digit surge in export-import turnover

Lao Cai Customs sees a triple-digit surge in export-import turnover

VCN - Updated from the beginning of the year to October 24, total import and export turnover through Lao Cai Customs Department increased by 102%.
Read More

Your care

Latest Most read
Import and export are expected to reach 800 billion USD

Import and export are expected to reach 800 billion USD

VCN - At the regular Government meeting in September 2024, Minister of Industry and Trade Nguyen Hong Dien assessed: import and export continued to be a bright spot, recording a positive recovery compared to the same period last year.
Fresh coconuts quenching new overseas markets

Fresh coconuts quenching new overseas markets

Vietnam’s fresh coconuts are being increasingly consumed in international markets such as the US, China, and the UK, highlighting a bright spot in Vietnam's fruit export sector with many opportunities for breakthroughs in the near future.
Rice exports likely to set new record in 2024

Rice exports likely to set new record in 2024

Vietnam sold 800,000 tonnes of rice overseas for 505 million USD in October, bringing the country's total export volume and value in the first ten months to nearly 7.8 million tonnes and 4.86 billion USD, up 10.2% and 23.4% year-on-year, respectively.
Vietnamese goods conquer halal market through trust and quality

Vietnamese goods conquer halal market through trust and quality

According to the Ministry of Agriculture and Rural Development, Vietnamese agricultural and aquatic products could penetrate the Halal market.
Exporters urged to have strategies to take advantage of UKVFTA for expansion

Exporters urged to have strategies to take advantage of UKVFTA for expansion

The UK is concerned by sustainable development, labour issues, environmental protection and social responsibility. Therefore, when exporting to the UK, enterprises should not just be concerned about being competitive in terms of price and quality.
Mobile Version