New vehicle sales in Vietnam fell sharply in February, by almost 29% to 12,221 units from 17,160 units in the same month of last year, according to member data released by the Vietnam Automotive Manufacturers Association (VAMA).
Some of this decline was attributed to fewer working days in the month compared with last year due to the timing of this year's lunar new year holidays.
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The main factor behind the decline, however, was a change in import regulations. The government cut import tariffs on built up vehicles from ASEAN neighbours to zero at the beginning of the year from 30% previously.
At the same time it introduced a series of new technical requirements under Presidential Decree 116 covering emission standards, warranties, type approval and the provision of aftermarket services with which importers so far have struggled to come to terms.
Imports screeched to a halt in January, prompting key trading partners including Indonesia to demand urgent intergovernmental trade talks.
Local deliveries of popular imported Toyota models, for example the Hilux pickup truck from Thailand and the Fortuner SUV from Indonesia, fell to close to zero in February.
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By GlobalDataTotal vehicle sales in the first two months of the year were still over 2% higher at 37,602 units from 36,774 units a year earlier, reflecting strong sales of available stock in January.
The performances of the individual brands varied significantly in the two month period compared with the previous year. Toyota remained the leading vehicle brand in the country, albeit with sales falling by over 10% year on year to 7,996 units.
Truong Hai (Thaco) group, the local assembler and distributor of brands such as Kia, Mazda, Peugeot and Hyundai and a significant player in the commercial vehicle segment, reported an almost 16% rise in group sales to 16,463 units.
Mazda sales alone increased by 50% to 7,044 units and Kia sales were up by almost 27% to 4,912.
Ford's sales fell by 21% to 3,505 units while Honda volume rose 27% to 2,257 and Mitsubishi's jumped 44% to 1,648.
In the first week of March the first batch of vehicles to pay no import tariff were imported into Vietnam – around 2,000 Hondas from Thailand.
Other vehicle manufacturers and importers are working through the additional technical requirements imposed by the Vietnamese government and are expected to normalise their operations in the near future.
The market is expected to rebound strongly this year with prices set to fall dramatically due to the tariff cuts. Grey market importers will likely be left out in the cold, however.
