New vehicle sales in Vietnam fell 32.6% year on year last month to 5,180 units as the government stepped up its efforts to cool down a market that is highly dependent on imports and a major contributor to the country’s record trade deficit.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
According to the Vietnam Automobile Manufacturers Association (VAMA), September’s sales were also down by almost a third compared with August.
Vietnam has some of the highest import duties in Asia, making it one of the region’s most expensive vehicle markets. In mid-August, the government increased registration tax on cars from 5% to 15% of value.
Vehicle manufacturers have also been hit by the rising cost of imported components due to higher duties, the depreciating dong and higher raw material costs. VAMA estimated that the local vehicle industry’s input costs have risen by 20% so far this year.
The economic environment has also weakened significantly in the last few months, with inflation having reached peaks of close to 30%, the stock market down by two-thirds compared with last year’s peak levels and the outlook for exports deteriorating significantly as the global financial meltdown deepens.
Sales in the January-September period reached a record 90,057 units – almost 83% higher than the 49,237 vehicles sold in the year earlier period, as buyers anticipated rising prices.
Imports increased almost threefold to 45,900 units in this period. Toyota has sold 18,656 vehicles year to date, up almost 21% on last year.
The vehicle market is expected to continue to weaken over the next year, with a sharp drop in volumes expected in the early part of 2009 after the government increases the VAT rate on commercial vehicles, which accounted for over 60% of total sales so far this year, from 5% to 10% in January 2009.
Tony Pugliese
