Do registration incentives help "stimulate" car market?

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Domestic car production is still facing difficulties

Recent data from the Vietnam Automobile Manufacturers Association (VAMA) and enterprises outside VAMA show that, in August, sales of cars are not as expected.

For members of VAMA alone, August saw a serious decline in sales when only 19,601 vehicles were sold, down 14% from the previous month (down 4% year-on-year).

Of which, passenger car sales decreased by 12%; commercial cars by 19% and special use cars by 20%. Notably, despite support from the policy of reducing registration fees, the output of domestically assembled cars still decreased by 20% when only reaching 12,869 units (CBU imported cars were 7,786 units, a decrease of 2%).

In August, adding 5,367 units of TC MOTOR (a business producing and trading Hyundai branded products, accounting for a large share in the Vietnamese passenger car market with over 40,987 vehicles in the past eight months), the market has sold 24,977 vehicles, down about 24%.

In fact, the number ofcars is greater because other auto companies that are not members of VAMA have not released specific sales figures. However, the decline is the general situation of the entire Vietnamese auto market in August in particular and in May in general.

Strong incentives, but customers do not care

There is no other solution to stimulate consumption; most car brands in the Vietnamese market have been applying incentives with a "huge" level that is considered unprecedented.

For example, the Fortuner model is given preferential treatment to VND55 million (including body insurance and free 3-year maintenance along with a domestically installed car model with enjoying preferential registration fee of about VND70 million) for customers,it means that customers save up to VND125 million.

VinFast reduces the price from VND50 million (for luxury Lux SA2.0) and VND150 million (for standard Lux SA2.0). Previously, VinFast was applying a series of other incentives to customers, making models with record discounts, for example, Lux SA2.0) could be reduced by up to VND600 million.

In August, the Everest SUV model produced in 2019 was also reduced by Ford dealers. In particular, the Ford Everest Titanium 2.0L AT 4WD version reduced the cash price by VND200 million, bringing the current car price down to VND1,199 billion, an unprecedented level. Ford Everest's versions Ambiente 2.0L MT 4x2, Ambiente 2.0L AT 4x2, Trend 2.0L AT 4x2 and Titanium 2.0L AT 4x2 of Ford Everest are also decreasing from VND70 million to VND120 million. Along with Ford Everest, Ford Explorer is also reduced to nearly VND100 million on this occasion.

Hyundai Kona standard version reduced by VND13 million, Kona special version decreased VND15 million and 1.6 Turbo version decreased VND20 million. Customers also get gift packages of genuine accessories.

Similar to Subaru, Volkswagen (VW) reduced VND120 million for the 2019 Tiguan Allspace Luxury by supporting a portion of the registration fee, bringing the car price to VND1,679 billion. Luxury S version costs VND1,869 billion, with a material insurance package of VND30 million. Passat BlueMotion High line of VND1.48 billion supports 100% of registration fee, equivalent to reduced costs of VND148-177 million depending on the region.

Even some other new models that have just been launched and sold such as Honda CR-V 2020, MG HS and ZS, Mazda6 2020, Suzuki Ertiga (Sport) are currently offered promotions and incentives by dealers, discounting from VND10-50 million to attract buyers.

Many new models were launched, but it is not enough to help the market grow

New car rush, expanding dealership

Despite the gloomy market, according to the plan outlined many months ago, last year, a series of new models were released.

At the end of July, the arrival of the Nissan Navara Black Edition A-IVI premium pickup version caused a stir in the market.

Also at the end of July, Toyota launched the Wigo 2020 model imported from Indonesia. Wigo of 2020 has many improvements, but Toyota Vietnam also dares to offer an increase of VND7 million with the manual version (VND352 million) and a decrease of VND21 million for the automatic version (VND384 million).

Next was the appearance of a new brand, MG launched two high-powered cars, the small ZS crossover (priced from VND518 million to VND639 million) and the mid-range crossover HS (priced from VND788 million to VND999million.

At the end of July, Mitsubishi announced the Xpander AT version was assembled at its factory in Binh Duong. Upgrading many gadgets, but Mitsubishi Xpander only inched up VND10 million compared to the old version (VND630 million),

Not to slow down, Honda CR-V 2020 is also assembled and shipped by Honda Vietnam at its factory in Vinh Phuc.

At the beginning of August, Toyota introduced a brand new Corolla Cross in the Vietnamese market (CBU imported from Thailand). This is an SUV model that is not only new in Vietnam but also just appeared in the world about a month ago. Despite considered by the company to be at a quite competitive price (three versions 1.8G, 1.8V and 1.8HV, with prices of VND720 million, VND820 million and VND910 million,respectively), however, Corolla Cross only saw 217 cars sold.

Next was the surprise from Thaco when it launched the small crossover Kia Seltos assembled at the factory in Chu Lai with four versions priced from VND 589 million to VND719 million.

In August, the largest car manufacturing joint venture in Vietnam also launched the Toyota Hilux 2020 with four versions or VinFast launched the limited production "special" model called President.

The market is still full of concerns

At the end of the eighth calendar month, the market is also about to enter the lunar month. Psychology of not buying large assets (including cars) is removed. In the long run, however, the Covid-19 pandemic still creates challenges that cannot be handled overnight. The most worrying thing is the difficult economic situation and the unpredictable pandemic, causing consumers to tighten their spending mentality.

So, many forecasts show that, in September, it is difficult for sales to reverse growth, even declining, and so the solution of reducing, promotional prices, incentives has not stopped.

The auto market in 2020 is predicted to have the lowest growth rate, at least not in the past 10 years. While this is the period that domestic manufacturing enterprises have been investing heavily.