New vehicle sales in Vietnam fell just slightly in June 2023, to 21,893 units from weak year earlier sales of 22,067 units, according to wholesale data released by the Vietnam Automotive Manufacturers Association (VAMA).

This followed much sharper declines throughout the first half of the year, reflecting a sharp slowdown in economic growth in the country. GDP growth slowed to 3.7% in the first half of the year, with second quarter growth slightly stronger than the first, despite a return of international tourism after last year’s Covid restrictions. This compared with growth of 8% in the whole of 2022, reflecting a sharp slowdown in consumer spending and exports.

Vietnam’s central bank moved to support the domestic economy points in the last few months by cutting its benchmark interest rate by 150 basis points to 4.5% from a peak of 6% earlier in the year. The finance ministry also cut vehicle registration tax by 50% at the beginning of July until the end of the year to help the support domestic vehicle manufacturers.

Vehicle sales in the first half of 2023 fell 34% to 122,626 units from 185,466 in the same period of last year, with deliveries of passenger vehicles dropping by 38% to 91,807 units while commercial vehicle volume was down 15% at 30,819 units.

The data did not include sales of some key brands, including Mercedes-Benz, Hyundai and domestic startup VinFast, which together accounted for an estimated 23% of total vehicle sales last year.

Hyundai was reported to have sold 22,903 vehicles in the first five months of 2023, making it the country’s leading car brand.

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By GlobalData

Truong Hai (Thaco) group, the local assembler and distributor of brands such as Kia, Mazda, Peugeot and BMW-Mini and a major player in the commercial vehicle segment, reported a 44% plunge in group sales to 41,607 units year to date.

This included a 51% drop in Kia sales to 17,241 units, a 28% fall in Mazda sales to 14,089 units and an 81% plunge in Peugeot sales to 1,232 units while Thaco truck sales were down 36% at 7,619 units.

Toyota sales fell by 38% to 26,637 vehicles in the six month period benefiting Ford which reported an 80% surge to 17,423 units, thanks mainly to strong demand for its locally made Ranger pickup truck, while Mitsubishi sales fell 29% to 12,847 units, Honda 9,488 units (-53%) and Suzuki 7,770 units (-15%).

A number of foreign brands have announced plans to enter Vietnam’s electric vehicle market, which will inevitably put further pressure on domestic startup VinFast as well as established foreign brands.

BYD said it planned to build an EV plant in the country while Hyundai launched the Ioniq 5 in May and Mercedes-Benz said it would introduce three EVs this year.