Vietnam's auto market sets new record

The Vietnamese auto market had a booming year in 2022 in terms of car sales. (Photo: Hoang Ha)

According to the announcement from the Vietnam Automobile Manufacturers Association (VAMA), by the end of 2022, the association's sales reached 404,635 vehicles, plus TC Motor's figures of 81,582 vehicles and VinFast's of 22,330 vehicles, resulting in a total consumption of the entire Vietnamese automobile market of 508,545 vehicles.

New record set

Thus, after only reaching the threshold of more than 400,000 vehicles in the last 3 years, it can be said that 2022 is the year of explosion and breakthrough of the Vietnamese car market with a growth rate of up to 24% compared to 2021. Reaching the milestone of 500,000 vehicles sold is not only a new record in sales but it also shows that Vietnam is gradually becoming one of the major car markets in the region.

A major contributor to this breakthrough growth is the Government's stimulus policy of reducing registration fees by 50% in the first 5 months of the year, as well as a series of new car models introduced to the market, focusing on the low-cost popular car segment.

Vietnam is still a potential auto market for development. (Photo: Hoang Hiep)

In fact, according to experts, the consumption of the Vietnamese automobile market in 2022 could be even greater than 508,545 vehicles if it were not affected by the disruption of the component supply chain and the serious chip shortage that occurred in the first half of last year.

Thus, in the regional markets with sales of over 500,000 vehicles/year, now not only Thailand, Indonesia, Malaysia but also Vietnam is in 4th place.

Ranked 4th and hoping to close the gap

Although consumption has narrowed compared to the three countries mentioned above, in terms of production capacity, Vietnam still has a large gap. According to data from the Southeast Asian Automotive Association (AAF), as of the end of November 2022, Thailand is still the country with the largest car production in the region with 1,790,082 vehicles, followed by Indonesia with 1,330,238 vehicles and Malaysia with 633,412 vehicles, while Vietnam has only produced 407,100 vehicles.

Thailand and Indonesia are still the two major automobile manufacturing countries in Southeast Asia.

Looking at this figure, it can be seen that Thailand and Indonesia are still the two major automobile manufacturing centers in Southeast Asia. These are also the two countries with the largest number of cars imported into Vietnam in 2022 with the numbers of 72,034 cars (Thailand) and 72,671 cars (Indonesia) respectively.

According to the forecast of the Ministry of Industry and Trade, the Vietnamese automobile market will reach a scale of 700,000-800,000 vehicles/year by 2025 and over 1 million vehicles/year by 2030, but to achieve that, the Vietnamese automobile industry still has a lot to do. However, the most immediate and feasible goal that the Vietnamese automobile industry can achieve is to surpass Malaysia.

Especially when VinFast is aiming to produce electric vehicles in large quantities to serve the domestic market and export worldwide, and TC Motor has recently inaugurated a second automobile manufacturing and assembly plant in Ninh Binh, increasing the total capacity to 180,000 vehicles to not only meet domestic demand but also aim for export.

Many car models will switch from imported to assembled in 2023. (Photo: TC Motor)

Not to mention, some new car manufacturers such as Skoda and Chery have plans to form joint ventures with domestic partners to assemble cars in the coming years, showing that the trend of shifting car assembly from ASEAN countries to Vietnam is very clear.

There are still dark colors in a bright picture

Also in 2022, we witnessed two extremes in the Vietnamese automobile market. In the first 5 months of the year, the disruption of the supply chain and components caused many car manufacturers to fall into a shortage of goods, with no cars to sell. However, the high demand of the market has pushed the prices of both new and used cars to skyrocket, car buyers not only lost money buying expensive cars but also had to wait for many months to receive their cars.

Many "hot" car models are in short supply, causing prices to rise and buyers to have to wait for months. (Photo: Ngo Minh)

On the contrary, from the fourth quarter of 2022, car prices tend to decrease sharply due to more abundant supply, people's shopping demand is no longer high due to the economic downturn and banks tightening credit limits. Car dealers even accept to cut losses to sell cars without being sure of buyers.

As a result, although manufacturers are competing to stimulate demand by deeply discounting many car models, according to the latest report from VAMA, sales of the entire market in December 2022 reached 35,301 vehicles, down 3% compared to the previous month and down sharply by 24% compared to the same period last year. This is rare in the Vietnamese car market when consumer demand often increases at the end of the year.

It is forecasted that despite the supply no longer being scarce, the purchasing power of the Vietnamese automobile market will continue to be affected by the economic recession, at least until the first half of 2023.

So, will the figure of more than 500,000 vehicles in 2022 continue to be maintained? Everyone is waiting for the Government's solutions to the economic situation in general and the automobile industry in particular in 2023.