New vehicle sales in Vietnam fell 17% to 23,993 in September 2023 from 28,757 units a year earlier, according to the Vietnam Automotive Manufacturers Association (VAMA).

Last month’s fall extended a decline that began in the fourth quarter of last year following an initial rebound from the covid lockdowns earlier that year. Economic growth continued to accelerate in the third quarter, however, to 5.3% year on year from 4.0% in the second quarter, helped by a rebound in international tourism.

Consumers continued to shun large purchases despite significant rate cuts by the central bank earlier this year with the service sector continuing to drive domestic growth.

The finance ministry cut vehicle registration tax by 50% at the beginning of July until the end of the year to help support domestic vehicle manufacturers which are also offering discounts to stimulate sales. The registration tax on EVs has been cut to zero until 2026, while additional purchase incentives are being considered by the ministry as part of a broader package to attract more EV production in the country, including reducing import taxes on EV components and charging equipment.

Vehicle sales in the first nine months of 2023 were down 28% at 190,130 units from 264,951 in 2022 with deliveries of passenger vehicles plunging 32% to 144,489 units while commercial vehicle sales dropped by 15% to 45,641.

The association’s data did not include sales of Mercedes-Benz, Hyundai, Tesla and domestic startup VinFast which together accounted for an estimated 23% of total vehicle sales last year.

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By GlobalData

Truong Hai (Thaco) group, the local assembler and distributor of Kia, Mazda, Peugeot and BMW-Mini and a major player in the commercial vehicle segment, reported a 34% plunge in group sales to 67,228 units year to date (YTD). This includes a 42% drop in Kia sales to 27,877 units; a 10% fall in Mazda sales to 23,866 units and a 79% plunge in Peugeot sales to 1,842 units while Thaco truck and bus sales were down 31% at 12,180 units.

Toyota sales fell by 40% to 38,490 vehicles YTD with the Hilux pickup truck and Hiace light van still largely absent from the market. This benefited Ford which reported an 71% jump in sales to 26,484 units thanks mainly to strong demand for its locally made Ranger pickup truck, while Mitsubishi sales fell 29% to 21,646 units; Honda 15,070 units (-40%); and Suzuki 10,848 units (-10%).

Separate reports suggested Hyundai sold 34,800 vehicles in the first eight months of 2023, making it the country’s leading vehicle brand in this period just ahead of Toyota, while VinFast sold just 14,700 units in the first seven months of the year.

A number of foreign brands recently announced plans to enter Vietnam’s electric vehicle market, which will inevitably put pressure on domestic start-up VinFast as well as established foreign brands. China’s 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 will introduce three EV models by the end of the year. Great Wall Motor also launched its Haval H6 hybrid SUV last month, while Lynk & Co plants to launch an EV in October.