Mazda's deep price cuts cause chaos in the Vietnamese auto market

The deepest decrease compared to November is for Mazda6 with 170 million while CX-5 and Mazda3 also have the highest decrease of 90 million.

Mr. Nhat Linh in Hanoi, at the end of November planned to buy CX-5 at a dealer on Le Van Luong street for 934 million for the 2.0 2WD version, but just a few days later, in early December, an employee of another dealer on Nguyen Trai said the price was only 909 million, a reduction of 90 million compared to the listed price on the website. After reviewing the information, it became clear that from the beginning of December, the price policy applied to all dealers is the same, details in the table above.

Not only do dealers offer discounts, they also offer free civil liability insurance and motor vehicle physical damage insurance to customers buying cars, worth 6-11 million VND added to the official discount.

Mazda focuses on its year-end sales program with the usual trick of deep discounts, but this price range has shocked many customers because they "didn't think the discount would be that deep".

Truong Hai has been reducing prices since early December for five of its car models: Mazda2, Mazda3, Mazda6, CX-5 and BT-50. The reduction is proportional to the car price, meaning the higher the price, the deeper the reduction. The two best-selling car models, Mazda3 and CX-5, have both been reduced by 65-90 million, enough to create a safe distance compared to competitors that are not cheap such as Altis, Civic, CR-V and X-Trail.

Truong Hai's price advantage-based sales strategy has been built since around 2015 and has been maintained until now. Not only Mazda, Kia and Peugeot also regularly have monthly discount programs.

Mr. Bui Kim Kha, General Director of Truong Hai's passenger car division, said that the company's strategy is to offset profits with sales, so as the production scale increases, the company has more grounds to reduce prices. Car prices decrease, sales increase, which in turn promotes further production increases. This strategy creates a cycle that causes the number of cars produced and sold by Mazda and Kia to increase continuously.

CX-5 highest discount 50 million.

The "shocking" price reduction at the end of the year created momentum to push cars from dealers to the market. However, in early 2017, prices may increase again due to exchange rate conversion as well as ensuring economic benefits. The Kia brand has the highest sales among the three, along with Mazda and Peugeot, and has achieved its targets well, so it does not have a strong price reduction policy like Mazda.

With this method, the actual selling price of Mazda2, Mazda3 or CX-5 is hundreds of millions lower than its competitors, a big gap that makes customers hesitate. Since the beginning of 2016, Truong Hai's car sales have surpassed Toyota.

In October 2016, there were 1,110 Mazda3s with owners, far surpassing the rival Altis which sold 465 cars. CX-5 sold 855 cars while CR-V sold 577 cars. The newly launched Nissan X-Trail initially achieved expected results with 300 cars/month but still could not threaten CX-5.

Truong Hai's pricing policy has a strong impact on the market situation, making it difficult for competitors to sit still. Toyota recently reduced the price of the new Camry by 24-31 million depending on the version, while customers who have bought Altis for the past few months have always received good price incentives of up to tens of millions. At Honda dealerships, the discount is 10-20 million, Ford by 40-60 million and Mitsubishi also reduced by 20-35 million.

Experts from rival companies commented that Truong Hai's price "attack" is an extremely bold and reckless policy, because it requires long-term financial resources to maintain continuously for several years. These people also said that in reality, price competition can be counterproductive in the long run. Because the previous generation of customers has the mentality of being "disadvantaged" because of higher prices than later buyers, which can easily lead to a decrease in brand loyalty.

Mazda is present in most of the B, C, D, crossover and pickup segments. Currently, the company is leading in the C segment with the Mazda3 and the crossover segment with the CX-5. The policy of continuous price reduction has not been effective in other segments.

In the B segment, Mazda2 is only a small corner of the traditional name Toyota Vios. In October 2016, Vios sales were 7 times higher than Mazda2. Above, Mazda6 has not been able to overthrow Camry. BT-50 pickup truck shares the same platform with Ford Ranger but Ranger sales are 4 times higher than BT-50.

Truong Hai was also caught up in controversy over quality issues when Mazda3 and Mazda2 equipped with 1.5 liter SkyActiv engines continuously had the phenomenon of "goldfish" reporting engine errors. After many meetings with customers and the Registry, the company had to recall to check, repair and replace injectors with more suitable materials.

According to VNE