Reduced by 200 million/car, the car price 'war' becomes more dramatic

A series of new car models are launched by joint ventures and domestic assembly, imported cars are also accelerating to bring in many new cheap models. This makes car companies unable to stand still and find every way to reduce prices. With the deadline of 2018 for import tax on cars from ASEAN to Vietnam to be eliminated, will the market have more dramatic price wars?

In the market, in just 3 months (from May to July), many types of cars have had a sharp price reduction. The number of new cars entering the market has also immediately established the same price or only slightly higher than the old models while the designs and utilities are more advanced than before.

All companies enter the "war"

Overwhelming the car market in the past 3 months are 3 car models with extremely strong price reductions: Suzuki Grand Vitara is reduced up to 170 million VND/car; Honda Odyssey is reduced up to 200 million VND/car, Mitsubishi Pajero 3.0 is reduced up to 164 million VND/car.

In addition to the "super-fast" price reductions, Vietnamese automakers are also deeply involved in the car price reduction game. In June, Honda had the biggest price reduction for the domestically assembled CRV multi-purpose vehicle, with a reduction of 150 million VND/car; the Civic Turbo imported from Thailand was also reduced by 50 million VND/car.

Thaco is not out of the game, when it reduced the Mazda CX5 model by 30 - 40 million VND in June. Thanh Cong reduced the price of Hyundai Elantra (40-50 million VND), SantaFe (50-70 million VND)...

Toyota Land Cruiser brand also reduced 130 million VND for 2016 model to push sales. The 2017 Land Cruiser version only reduced 20 million VND according to the dealer, but the company price remained the same since June 2017.

The car price war is increasingly fierce (illustrative photo).

In particular, despite being a newcomer, Volkswagen's official distributor in Vietnam has also aggressively joined the game by discounting two car models, including the Polo sedan (50 million VND discount) and the most is the Touareg multi-purpose model (260 million VND).

Mitsubishi Vietnam also reduced the price by 50 - 106 million VND for the two Pajero Sport models, and 90 million VND for the Outlander model; 60 million VND for the Triton pickup truck and 50 million VND for the Mirage small car. In addition, other car models such as Nissan X-Trail; Cruze and Colorado of GM Vietnam... also reduced the price of many car models very strongly.

Have car prices hit rock bottom or will they drop further?

In June 2017, some domestic car assembly companies said that with the rapid decrease in car prices recently, many car models have hit rock bottom and it is difficult to reduce further. However, at the beginning of July, some domestic car companies themselves reduced the prices of many of their strategic car models.

Explaining this, a car company said: The additional price reduction is essentially cutting costs, further reducing the profits of the company and the dealer to gain sales. In fact, the current car prices have decreased quite rapidly, there is no more cutting, where to reduce costs to reduce.

However, there are also other opinions that car prices will continue to decrease from now until the end of the year, and may decrease even more in 2018. "If import tax is reduced by 30%, other taxes and fees remain unchanged, imported car prices will decrease by hundreds of millions of VND per car," said a car dealer in Pham Hung, Hanoi.

In fact, there have been two trends of car price reduction in Vietnam recently, the "trigger" being domestic joint venture car companies. However, recently, it has been imported car companies, including many car brands that do not have factories in Vietnam.

According to the explanation of expert Ngo Tri Long, if other factors remain unchanged (registration fee, special consumption tax (SCT)... and the removal of the remaining 30% import tax on completely built-up cars from ASEAN, domestic car prices will have the necessary and sufficient conditions to decrease.

In fact, in 2017, when the above tax on cars from ASEAN was reduced from 40% to 30%, both domestic and foreign car manufacturers reduced prices very strongly. If the import tax is removed, there will be more opportunity for car prices to decrease even more.

Some car businesses analyze the price reduction rules and make the assessment that joint ventures assembling and importing cars in Vietnam are occupying a very large market share, they understand better than anyone that participating in the price reduction war will be disadvantageous for them. Therefore, joint ventures will "look at each other", or have a move to join hands to stabilize car prices, avoiding affecting business results.

Specifically, for car brands with assembly plants in Vietnam, including imported parts such as Toyota, Honda, Ford... they have a distribution system, warranty, brand recognition and especially customer trust, so they will certainly reduce prices less. Besides, if the price of imported cars drops sharply, making domestic cars of the same brand unable to compete, multinational corporations all have calculations to keep prices safe, suitable for all parties and in accordance with commitments to other countries.

However, for purely imported cars to Vietnam such as BMW, Mitsubishi, Audi, Volkswagen, Lexus... they will certainly do everything to reduce prices, increase market share and market to compete with domestic car manufacturers. This will be the main trend leading the car price reduction war in Vietnam after 2018.

According to VNN