Nghe An is in the top 5 localities with the most car purchases.

Hanoi continues to lead

Statistics from the Vietnam Register show that in the first half of 2022, Hanoi continued to lead the country in car purchases. Specifically, the number ofpersonal car9-seat or less vehicles, purchased by people and first registered in Hanoi, in the first half of this year were 33,619. Ho Chi Minh City ranked second with 24,892 vehicles; Dong Nai ranked third with 7,992 vehicles; Binh Duong ranked fourth with 7,661 vehicles; Nghe An ranked fifth with 7,497 vehicles.

According to the General Statistics Office, in 2021, the average monthly income of Binh Duong province reached 7.12 million VND/person, the highest in the country. Ho Chi Minh City ranked second with 6.008 million VND/person; Hanoi ranked third with 6 million VND/person; Dong Nai ranked fourth with 5.75 million VND/person/month; and Nghe An only had 3.7 million VND/person.

Nghe AnAlthough Binh Duong is a poor province, it is always in the top of the country in terms of personal car purchases, not much less than the rich province of Binh Duong.

Traffic congestion is becoming a problem in Vinh City due to the increasing number of vehicles. Photo: Tien Hung

Regarding the most registered car brands, Toyota is still in first place with 47,254 vehicles of all types, followed by Hyundai with 33,373 vehicles, third is Kia with 24,129 vehicles, fourth is Honda with 19,893 vehicles, fifth is Mitsubishi with 19,702 vehicles.

The total number of personal vehicles with 9 seats or less registered for the first time in the first half of 2022 reached 211,985 vehicles. Meanwhile, in the whole year of 2021, the number of cars with 9 seats or less, purchased by consumers and registered for the first time reached 318,704 vehicles of all types. Thanks to the 50% discountregistration feeWith domestically manufactured and assembled cars until the end of May 2022, the number of customers buying cars will increase.

Statistics from the Vietnam Automobile Manufacturers Association (VAMA) and businesses show that the most purchased car models by Vietnamese consumers in the first half of 2022 were Toyota Vios with nearly 11,937 cars; Toyota Corola Cross 10,913 cars; Hyundai Accent 10,240 cars; VinFast Fadil 9,566 cars; Honda City 9,439 cars; Mitsubishi 8,084 cars; Kia Seltos 7,899 cars; Mazda CX5 7,797 cars...

As the third most populous country in the ASEAN region, after Indonesia and the Philippines, with increasing income, the rate of private car ownership in Vietnam is still very low. To date, the total number of cars in circulation in Vietnam is nearly 5 million. Thus, the average number of cars per 1,000 people is about 50, however, not all of them are private cars.

In Japan, the number of registered cars has reached 68.9 million, meaning that one in two Japanese people owns a car. Similarly, in South Korea, the number of registered cars is 25.07 million for a population of nearly 52 million. That means 487 out of every 1,000 South Koreans own a car. In China, there are 302 million cars in circulation, meaning that 200 out of every 1,000 people own a car.

Fasting for more than 7 years

According to the General Statistics Office, in the first 6 months of 2022, the average monthly income of workers nationwide reached 6.5 million VND/person. With this income, owning a car is still quite out of reach for most workers. For example, with a car model in the B segment, the Honda City 1.5L, priced at 600 million VND, compared to the average income, Vietnamese people have to save for 7.5 years without spending anything to have enough money to buy it.

In Vietnam, the car ownership rate is less than 50 cars per 1,000 people. Photo: Hoang Ha

A 2020 survey by the General Statistics Office showed that, out of 1,000 households, the richest group had 127 cars, while the poorest group had only 5 cars. Looking at each industry sector, households in the service sector had the highest number of cars. Specifically, for every 100 households in this sector, there were 9.9 cars. In contrast, agricultural households owned the lowest number of cars, with only 1 car for every 100 households.

Private cars are subject to three main taxes: import tax, special consumption tax, and value-added tax. These are all indirect taxes that car buyers must pay. Furthermore, these three taxes are often levied on each other, so they often account for 30-60% of the selling price, depending on the car model. In addition, car buyers must also pay a registration fee of 10-12%, calculated on the selling price depending on the locality, not to mention other fees.

According to the Ministry of Finance, the average amount of special consumption tax that domestic automobile manufacturing and assembling enterprises pay to the state budget is about 2,450-2,800 billion VND per month.domestically assembled carsonly achieved sales of 200,000 cars/year. If including imported cars, special consumption tax alone collected nearly 5,000 billion VND per month.

In Indonesia, the price of a Honda City 1.5L is 16,407 USD, equivalent to about 400 million VND, while in Vietnam it is 600 million VND. High taxes are hindering the purchase of cars by many Vietnamese people.

However, assessments all agree that the Vietnamese automobile market is very potential and attractive. A 2020 Fitch Solutions report indicates that, when ranking the relative attractiveness of a country for automobile manufacturing facilities, Vietnam, Thailand and Malaysia are the most attractive automobile retail markets among emerging Asian countries.

Potentialcar marketdepends on three factors: population size and structure, per capita income and average number of cars per 1,000 people. In Vietnam, per capita GDP has exceeded 3,000 USD/year, while the car ownership rate is less than 50 cars/1,000 people, so the potential is huge.

Vietnam is entering the automotive stage, with the rapid increase of the middle class, which is a major consumer of personal cars. By 2025, the market size is expected to reach 800,000 - 900,000 cars/year, surpassing Malaysia and even Thailand to rise to second place in the region. With the goal of becoming an upper middle-income country by 2030, cars will gradually become a popular means of transportation.