Imported small cars attract customers

The domestic automobile market has a large differentiation between small-capacity cars under 2.5L and cars over 2.5L. In particular, the number of small-sized imported cars continuously entering Vietnam and selling quite well, while cars with large engines are almost "inactive".

Choose to buy a small capacity car (Photo: CAO THANG)

Increase quantity, decrease value

According to the import data of completely built-up cars in recent months, importers mainly prioritize importing small, low-priced cars to serve market demand. Specifically, statistics for June 2016 show that the domestic market imported 9,000 completely built-up cars of all kinds, worth up to 248 million USD. However, by July 2016, the number of completely built-up cars imported had increased to 11,000 cars, worth 208 million USD. By August 2016, the national market imported 10,000 completely built-up cars, but the import value was only 176 million USD. The sharp increase in the number and decrease in the import value of completely built-up cars in recent times is due to the strong changes in the demand and import market of domestic cars due to the impacts of tax and car import policies. Under the new tax policy, the import price of small cars has been significantly reduced, while the price of some cars with large engines has skyrocketed. That is why the number of imported small cars with engines under 2.5L has skyrocketed, but the monthly import value has decreased.

Notably, small cars mainly come from Thailand, India, and Indonesia to Vietnam, because they are much cheaper than imported cars from other countries in the world. For example, on average, each Thai car imported to Vietnam costs about 18,290 USD and mainly focuses on the pickup truck or 7-seat segment such as: Toyota Hilux, Ford Ranger, Mitsubishi Triton, Mazda BT-50 and Chevrolet Colorado.

“Car imports from Thailand have accelerated sharply due to the strong impact of the tax reduction roadmap, leading to a reduction in car prices. If taxes and fees in Vietnam are included, most imported Thai cars cost around VND700-800 million,” said Nguyen Van Thanh, Director of Thanh Tam Co., Ltd. (Binh Tan District), which specializes in car imports. Car dealers predict that Thai and Indonesian cars will flood into Vietnam when the import tax is reduced to 0% in 2018, applicable to the ASEAN region. The average price of imported cars from Indonesia is around USD13,000/car.

Most of the cars imported from Indonesia to Vietnam are the Ertiga MPV model, the rest are commercial vehicles and small trucks. The price of the Ertiga when arriving at the port is about 13,000 USD/car, but after calculating all taxes, the price to customers is nearly 700 million VND. Many car import shops said that in the near future, they will focus on importing cars from Indonesia with 7-seat family cars.

Choose to buy a small capacity car Kia Rio (Photo: CAO THANG)

Luxury car in the afternoon market scene

In contrast to the small car line, the car lines with a capacity of 2.5L or more, both imported and domestically consumed, are extremely sluggish. A representative of Toyota Dong Sai Gon on Nguyen Van Luong Street (Go Vap District) said that on average, the company still sells 300 - 350 cars under 2.5L each month, but mainly 2.0 capacity cars with prices ranging from 540 - 860 million VND/car. Particularly, cars over 2.5L with prices ranging from 950 - 1.4 billion VND/car have almost no customers asking to buy. The reason is that after adding the new tax, the price of these luxury cars has increased too high. Similarly, Director of Hung Thinh Company Limited Pham Ngoc Chinh (District 5) - specializing in importing luxury cars with a capacity of 2.5L or more, said that after the Special Consumption Tax took effect until now, the business situation of the enterprise has been very gloomy, with almost no cars sold in some months. "With the current situation, in the near future, if the market does not improve, we will have to recalculate our business direction. Because if we only focus on luxury cars, it will be very difficult to maintain operations," said Mr. Chinh.

Similarly, Mr. Ngo Thanh Tri, Sales Department of Western Ford Company (Binh Tan District), added that due to the high tax increase, only the "rich" are now ordering luxury cars, but orders are also fewer than before. For example, the Everest 3.2, after adding the new tax, costs up to 1.936 billion VND, more than 300 million VND more expensive than before. This is such a high difference that customers need time to consider. Therefore, it is forecasted that from now until the end of the year, the demand for imported luxury cars will not change, especially in preparation for the annual sales season in October.

According to SGGP