New vehicle sales in Vietnam increased by 20% to 36,350 in December 2023 from 30,303 units a year earlier, according to wholesale data released by the Vietnam Automotive Manufacturers Association (VAMA).

The data excluded a growing number of non member brands, however.

This was the market’s first positive month in over a year with the domestic economy continuing to recover from the central bank’s sharp interest rate hikes over a year ago. Loan rates have since come down and domestic economic activity has strengthened. GDP growth accelerated to 6.7% year on year in the fourth quarter, up from 5.5% in the third quarter and 3.8% in the first half of last year, helped also by a rebound in international tourism.

Buyers rushed into the market last month ahead of the expiry of the 50% vehicle registration tax discount introduced by the Ministry of Finance last July until the end of the year to help support the local market.

For battery electric vehicles (BEVs) the registration tax has been cut to zero until 2026 while the special consumption tax has been reduced to between 1% and 3% as part of a broader package of government incentives to attract more BEV investment into the country, including cuts in import duties on components and charging equipment.

VAMA data shows vehicle sales fell 23% to 276,377 units last year from 358,063 in 2022 with deliveries of passenger vehicles dropping by 25% to 214,619 units while commercial vehicle sales were down by 16% at 55,737 units.

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By GlobalData

The data did not include Mercedes-Benz, Hyundai, Tesla, Nissan, domestic startup VinFast and a growing number of Chinese brands which have entered the market in the last two years.

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 25% fall in group sales to 97,718 units last year.

This included a 33% drop in Kia sales to 40,773 units; a 1% fall in Mazda sales to 35,632 units; and a 70% plunge in Peugeot sales to 3,038 units; while Thaco truck and bus sales were down by 27% at 16,165 units.

Toyota sales fell 37% to 57,414 vehicles in 2023 with the Hilux pickup truck and Hiace light van still largely absent from the market. This has benefitted Ford which reported a 33% jump in sales to 38,322 units thanks mainly to strong demand for its locally-made Ranger and Transit light commercial vehicles while Mitsubishi sales fell by 22% to 30,894 units; Honda 23,802 units (-22%); and Suzuki 13,317 units (-18%).

Separate reports show Hyundai sold around 67,500 vehicles in Vietnam last year, making it the country’s leading vehicle brand ahead of Toyota, while VinFast sold just 19,500 globally in the first nine months of the year. The company launched the new VF6 sub-compact BEV model at the end of September.

A number of Chinese brands recently entered the market, targeting also the BEV segment, including BYD, Lynk & Co, SAIC Motor and Great Wall Motor, while Hyundai and Mercedes-Benz launched a number of BEV models in the last year.