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Car market in April: Slump and inventory

09:08 | 16/05/2020

VCN - In April, heavily influenced by the Covid-19 pandemic, the business results of automobile brands in Vietnam all decreased significantly. However, what worries the firms more is how long this decline will last when customer psychology limits spending and they wait for a further decline in prices.

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car market in april slump and inventory
Automobile production and business activities are facing difficulties.

Deep reduction

The most recent report from the Vietnam Automobile Manufacturers Association (VAMA) shows that in April, VAMA members sold just 10,816 cars, down 46% compared to the same period in 2019.

With the exception of Isuzu, which increased by 2%, other companies all saw large sales decreases, such as Ford by 53%, Mazda by 49%, Honda by 41% and Toyota by 29%.

The members of VAMA so, of course, the leader of Vietnam's automobile market, TC Motor, inevitably reduced sales, even fell deeply, to 57% (only reached 2,206 vehicles).

TC Motor's Hyundai car sales in April were only about a third of the average sales in the months of 2019.

Among Hyundai product lines being distributed in Vietnam, Accent sedan is still the best-selling model of this brand with sales of 618 units (down by 925 units compared to March 2020). Grand i10 ranked second with 456 vehicles (down 717 vehicles).

Crossover / SUV sports cars of Hyundai such as KONA, Tucson, SantaFe also only sold around 300 cars in April 2020. Although the Elantra model is applied by dealers with preferential and discount programs, the sales results also stop at 124 cars.

Accumulated in the first four months of 2020, the total sales of Hyundai cars in Vietnam reached 17,568 vehicles. This result helps Hyundai continue in the group of the three best-selling automotive brands in Vietnam.

The second largest player in the Vietnamese automobile market is Toyota Vietnam (TMV), although sales have also decreased (sales of 2,803 vehicles, down 33% compared to the same period in 2019 and nearly 50% compared to the previous month), there is hope. In April 2020, TMV has the Rush model with impressive sales growth compared to the same period last year with 180 cars, more than 1,500% growth or 264 units sold by Camry, up 56%.

Toyota Vios reached 1,106 vehicles – the best-selling model in the market in April 2020 – nearly doubling sales of the second-ranked model, Hyundai Accent with 618 units.

Although not a big enterprise in the automobile market, Honda Vietnam (HVN) created a significant impact in April with information that it is not capable of producing but turned to completely import automobile products in Vietnam.

HVN's automobile sales in April 2020 reached 843 units, down 57% from the previous month and down 52% compared to the same period last year. In particular, CRV model with 411 cars, City with 161 cars.

HVN currently sells seven models such as Brio, Jazz, City, Civic, HR-V, CR-V, and Accord. However, only Honda City model is still assembled and produced in Vietnam, the rest have been imported.

Recently, with the reason that the market of automobiles and motorbikes decreased due to the impact of the Covid-19 pandemic, which caused a decrease in the production of domestically produced cars, HVN mentioned its ability to transform its business model in Vietnam to the Ministry of Planning and Investment.

car market in april slump and inventory
Car consumption in April dropped sharply.

Discount problem

Consumption dropped sharply, all companies rushed to apply promotional policies, discounts and gifts to attract customers. In the first four months of the year, Vietnam automobile market had about 30 discounted models. In particular, there are many models that are very popular such as Toyota Fortuner, Toyota Innova, Mazda CX-8, Honda CRV, Ford Everest and Explorer, with a reduction from VND100 million to nearly VND300 million/pcs.

In May, the production activities of automakers gradually stabilized, the economy also had many policies to support production and business enterprises. The product does not necessarily increase rapidly.

Therefore, in the early days of May, although many companies have updated car prices with many new incentives (such as Isuzu D-Max discounted up to VND130 million, Hyundai Accent reduced by VND7-20 million, Honda Brio 2020 decreased by VND20-24 million) but walking through the market shows that the consumption level of car brands has not improved much.

Even Vinfast, the Vietnamese automobile brand, has also announced a reduction of nearly VND 300 million for two models, Lux A2.0 and SA2.0, together with the car purchase program. Old and new car support, but it seems the result is not as desired.

Because an important cause of low car consumption is consumer sentiment still waiting when imported cars are high, high inventory pressure is on dealers and automakers, prices will continue to fall deeply.

According to the latest report of the Ministry of Industry and Trade, in the first three months of the year, the car inventory index increased by 122.5% over the same period in 2019. The rapid increase in inventory volume means that car sales of automakers plummeted and profits decrease, while production costs soar.

Inventories are a major concern for automobile manufacturers today. Therefore, next time the company will surely make big moves to solve this problem to promote product sales.

By Nguyen Ha/ HuuTuc