What would happen if car prices dropped across the board?

When car prices fall, more people will be able to own a car. Cities will become overloaded, leading to severe traffic congestion and a shortage of parking spaces. However, cars will help develop satellite cities.

The year 2018 began with the effective date of many laws and decrees related to the automotive market. Consumers expected positive changes, leading to lower car prices in Vietnam and more people having the opportunity to buy a car. So what would happen if car prices dropped across the board, and the number of cars increased dramatically?

Cars are completely immobile in major cities.

According to Solidiance, the car ownership rate in Vietnam is currently 16 cars per 1,000 people. This figure is significantly lower than Malaysia (341 cars per 1,000 people), Thailand (196 cars per 1,000 people), and Indonesia (55 cars per 1,000 people).

The majority of cars are registered in major cities. Hanoi and Ho Chi Minh City alone account for 45% of new car registrations annually.

Despite having some of the lowest car ownership rates in the region, traffic congestion in Hanoi and Ho Chi Minh City remains severe.

The rapid increase in the number of cars has exacerbated traffic congestion.

According to the British economic newspaper, The Economist, only 9% of the land in central Hanoi is used for main and secondary roads, compared to 32% in Manhattan (New York, USA). The World Bank calculated in 2011 that if the number of cars reached a level comparable to Malaysia, the entire capital city of Hanoi would be paralyzed and unable to move.

In Ho Chi Minh City, the proportion of land allocated to transportation is only around 8%, reaching 30% of the actual demand.

Thus, the desire of Vietnamese people to own cars is entirely legitimate, but if prices fall to the point where everyone can afford a car, traffic congestion will become a major problem for policymakers.

According to market research firm Audience Project,On average, a car owner in Hanoi spends 58 minutes and in Ho Chi Minh City 51 minutes each day navigating traffic jams.

Lack of parking spaces

Besides traffic congestion, finding parking in major cities is also a major challenge. According to a survey by Audience Project, 49% of car owners in Hanoi and 53% in Ho Chi Minh City are considering whether to continue using their cars due to the inconveniences they face.

Besides traffic congestion, the main reason for this situation is the inability to find parking. In Hanoi, 77% of respondents said they often miss important appointments because they are struggling to find a parking spot, while the corresponding figure in Ho Chi Minh City is 68%.

In both cities, the average time an individual spends looking for parking is 45 minutes. More than half of those surveyed said they would not use their car unless it was absolutely necessary.

Owning a car is a legitimate need for people to ensure their health and safety; however, the inconveniences during use are the biggest obstacle that makes many Vietnamese people hesitant to buy a car.

Developing satellite urban areas

Despite the drawbacks that cars bring, the development of a strong automotive market and the increase in car ownership rates among Vietnamese people also bring many positive effects. The first is that it contributes to decentralizing the population from urban centers.

When everyone can own a car, people can live far from the city center, work in satellite cities, or even hundreds of kilometers away from the center.

For example, in the US, low-income individuals often live in suburban areas but commute to the city center for work. Decentralizing the population from the city center would cool down the central real estate market and stabilize land prices.

For example, in Ho Chi Minh City, if cars become a common mode of transportation, people could live in areas like Dong Nai, Binh Duong, or Cu Chi, Long An, and still easily commute to work in the city center.

Many people owning cars contributes to decentralizing the population from urban centers.

For example, someone living in the Long Thanh - Dau Giay area would only need about 45 minutes to commute to the city center and return home at the end of the day. When pressure in the urban core decreases, the government will have more land to develop infrastructure, stimulating the development of a megacity model.

For example, in Malaysia, due to the heavy traffic in Kuala Lumpur, the government established a new city called Putrajaya, located 30 km from the capital's center. Residents of Putrajaya can still commute to work in Kuala Lumpur daily and return home in the evening.

However, to achieve this, transportation links between the city center and satellite cities must be improved, including highway systems and public transport.

Owning a car is a necessary and essential need if the country wants to develop in a modern direction. The prospect of lower car prices in 2018 is feasible. Besides the immediate consequences, developing a healthy automotive market and bringing car prices back to their true value is believed to contribute to improving people's lives and national development in the long term.

According to Zing