Car prices in Vietnam are virtual prices?

“I lost nearly 200 million VND overnight!”, a customer who had just happily bought a Honda CR-V 2.4TG for 1.028 billion VND a few days ago and thought he had made a profit of 120 million VND more than previous buyers, bitterly exclaimed when he heard that this car model had just been reduced in price by another 160 million VND, bringing the total depreciation in less than 4 months to 280 million VND.

Many people wonder if the Vietnamese auto market is in chaos or if distributors are playing tricks after making too much money for many years?

Car prices in Vietnam are virtual prices?

According to a survey by reporters in Ho Chi Minh City and Hanoi, recently, Honda's 5-seat crossover model has emerged as a "phenomenon" when its selling price has continuously changed from the listed price to the actual price for consumers.

Accordingly, the listed price of this car line changed 3-4 times in many forms, sometimes indirectly through cash support, sometimes directly by lowering the listed price.

As a result, from the listed price of 1.178 billion VND (2.4 TG version), 1.158 billion VND (2.4 AT version) and 1.008 billion VND (2.0 version) in early June, all 3 versions have dropped in price from 220 - 280 million VND and are all below 1 billion. Not only that, the actual price to customers will continue to fluctuate depending on the negotiation between the dealer, sales staff and the buyer.

Some sales staff even advertised an “unbelievably” low price of 730 - 760 million VND for the standard 2.0 version. However, when customers came to buy, the price was cleverly pushed up with the reason that the price of 730 million was only for the bosses of Honda motorbike dealers. Some customers quickly agreed to a good price, put down a deposit, then were shocked when the sales staff announced that the car was out of stock and asked them to buy a higher version or pay more for accessories, or else they agreed to take the deposit home.

In reality, regular customers are almost unable to buy at the advertised price and few people get a free scooter as part of the promotion because the version with a free scooter is limited in quantity and has been sold out. While customers are stunned, distributors quickly sell all the remaining inventory and previous buyers "cry" when they see that the scooter they just bought has lost hundreds of millions of dong in value.

In fact, a similar story to the Honda CR-V is not uncommon because for a long time, car prices in Vietnam have been "floating" and no one knows the real price of a car.

Previously, when the market had not yet closed to imported cars, the price difference between genuine and non-genuine cars was hundreds of millions of dong even though the non-genuine cars had “better” equipment. Now, imported cars are almost out of the market, genuine cars are “fighting” each other for market share, and car prices are still a matrix.

Mr. T. Long, a sales staff with 10 years of experience working at 2-3 major car companies, said that in the past, during the peak tax-running period, car prices were inflated in many ways because customers competed to buy. Nowadays, taxes are about to decrease, customers are hesitant to pay, so every sales person is looking for ways to "cut discounts" to increase sales.

“Normally, when a car goes to a dealer, there are tens or even hundreds of millions in commission for distribution, so depending on the market situation, that commission is cut into the price. Recently, cars were unsold, and leaving them in the warehouse was both a waste of parking space and a lack of capital, so the dealers accepted to cut most of their profits to push the goods quickly, which is why cars have different prices every day. As for the profits of the car companies, only they know,” commented Mr. Long.

Car prices plummet because there is no more chance to "make a big profit"?

Currently, it is not easy to give profit figures for each vehicle sold on the market because the input parameters from the import price declared at customs for completely imported vehicles to the cost price to create the product for domestically assembled vehicles are always a mystery. However, it is an obvious fact that the price of cars in Vietnam is 2-3 times more expensive, even 4 times more expensive than the after-tax selling price in foreign markets.

Manufacturers and distributors always use the excuse that cars are expensive because of high taxes, but economic expert Pham Chi Lan said that Vietnamese consumers are paying unreasonably high prices and even with strong discounts, car companies still make a profit. The companies' profits are only reduced, not at a loss.

Also explaining the story of car companies not making a loss, expert Ngo Tri Long said that it is a trick to adjust prices to a high level when the product is newly launched and is attracting customers, then gradually lower them to retain customers and add them up on average to make a profit.

Some experts believe that the psychology of customers waiting for tax reductions has reduced purchasing power, forcing companies to reduce profits to push inventory and pull the price level in the market from the sky to the ground. However, this is only a way to handle the situation when cars are too slow to sell and prepare for new versions. After 2018, with changes in taxes and fees, the price level will not necessarily decrease further.

To be fair, the price war was initially started by domestic automaker Truong Hai, with the rationale that the more cars produced, the better the price, and to encroach on foreign joint ventures’ market share. And when the market plummeted, no automaker could stay out of the price-cutting race, and it seemed that the higher the consumer’s “branch”, the lower the price of the car.

Therefore, perhaps it is time for consumers to change their perception of cars because they are basically a means of transportation, not necessarily a form of secured asset with a stable value. Instead of accepting to pay soft costs just to get a car early like before, smart consumption will make car prices less sky-high and make it difficult for manufacturers to continue to "make a big profit".

According to VNN