Car prices drop sharply, but customers remain indifferent

Despite a series of big companies aggressively cutting prices, the auto market in July still declined quite sharply compared to the previous two months.

After May and June holding on to a slight decrease of 1% and 0.2% respectively, the volume of cars sold in the Vietnamese market in July decreased by 27% compared to July 2016.

Not only did it decrease compared to the same period last year, the Vietnam Automobile Manufacturers Association (VAMA) said that the total number of cars sold nationwide last month only reached 20,600, down 15% compared to June. Meanwhile, in May and June, the market still recorded slight monthly growth, at 6% and 5% respectively.

In fact, the auto market has shown signs of decline since the beginning of the year. After months of continuous decline in auto sales, businesses in the industry were forced to compete to launch promotional and discount programs, not only for slow-selling models but also for best-selling models. This effort to stimulate demand has brought a slight improvement to the auto market in May and June.

However, by July, the price reduction tactic was no longer effective, even though this was the month that witnessed shocking price reductions from many big companies, with the highest level being nearly 200 million VND.

The number of cars sold in July by many car manufacturers decreased compared to the same period last year.

Early last month, Honda started with a decision to reduce the price of the Honda Odyssey by VND200 million and the Honda Accord by VND100 million. Better-selling models such as the Honda CR-V also saw an additional reduction of VND10 to VND20 million compared to the previous June. Following Honda, in mid-July, Mitsubishi also reduced the price of the Mitsubishi Pajero 3.0 by more than VND160 million.

The most common discounts last month ranged from 10 to 80 million VND for some car models of brands such as Mazda, Hyundai, Kia, Chevrolet. Even Toyota Vietnam, which has always been relatively indifferent to price reductions, could not stay out of the game last month. In addition to the official registration fee support from the company of about 30 to 40 million VND for some car models, many Toyota dealers in the North were also willing to reduce up to more than 60 million VND for the Vios model and up to 100 million VND for the Corolla Altis model.

However, the market still could not be saved. Toyota Vietnam was the company that suffered the most miserable decline last month. Specifically, this company sold a total of nearly 4,300 cars in July 2017, a decrease of more than 2,500 cars compared to July last year, equivalent to a decrease of 37%. Compared to the previous month, Toyota's car sales also decreased by nearly 900 cars, equivalent to 17%.

Other giants are also in a gloomy situation. Last month's car production of Thaco Truong Hai and Mercedes-Benz decreased by 33% and 36% respectively. GM Vietnam, Suzuki and Ford were better off, with only single-digit decreases.

With discount programs from manufacturers and dealers since the beginning of the year, car prices in Vietnam have decreased significantly compared to a few years ago. However, paradoxically, the more cars are discounted, the more gloomy the market becomes. According to some car buyers and sellers, the main reason is the hesitation of customers.

Customers are no longer trusting the sales staff’s “this is the best time to buy a car” announcement because they keep seeing new discount programs. In addition, because the discount level for the same car model is different, depending on the dealer’s policy, those who want to save money have to spend more effort and time.

So far, there are not many signs that car production will recover this month. Not to mention that August falls in the second half of the sixth lunar month and the first half of the seventh lunar month, the Ghost month. This is the time when some people do not want to buy cars and in fact, car sales in the Ghost month have always been quite low.

According to VNE