The car market is experiencing strong growth, while the motorcycle market is in decline.

The automotive market is experiencing strong growth, exceeding targets compared to the same period in 2013, with many familiar car brands popular with Vietnamese consumers. In contrast, the motorcycle market is in a slump, a dilemma of "not wanting to abandon it, but holding on is a burden."

Visitors examine Ford's new Fiesta model, a popular commuter vehicle. (Source: VNA)

Car sales increase.

While 2012-2013 was considered a difficult period for car manufacturers and showrooms, the first six months of this year have shown positive signs for the automotive market.

According to a report by the Vietnam Automobile Manufacturers Association, the market is developing as expected by manufacturers.

In May 2014, total market sales reached over 12,100 vehicles, a 25% increase compared to the same period in 2013. Of these, passenger cars accounted for over 7,200 units and trucks over 4,900 units.

Sales for the whole year of 2014 are expected to reach 125,000 vehicles, a 14% increase compared to the previous year. Reports from manufacturers such as Honda, Toyota, and Ford all show rapid growth and market share expansion.

By the end of May, Ford's total production had reached nearly 4,300 units, a 51% increase compared to 2013; Honda reached 2,700 units, a 200% increase; and Toyota achieved an impressive 13,230 units, a 10% increase compared to the same period.

Representing the automotive industry, Mr. Jesus Metelo Arias, General Director of Ford Vietnam, stated that Ford is continuing its growth momentum from the beginning of the year as it plans to expand further in Vietnam and is reaching out to more new customer segments.

"We look forward to continuing to serve an ever-increasing number of consumers in Vietnam through our expanding dealership network and introducing more of Ford's segment-leading models to our customers," said Jesus Metelo Arias.

According to the head of Ford Vietnam, the segment-leading Ranger and Transit models are becoming increasingly familiar to consumers as sales reach high levels.

In the first half of this year, Ford expanded and upgraded a number of dealerships and branches in Can Tho, Gia Lai, and My Dinh (Hanoi).

Ford is also planning to open another dealership in Binh Duong in the second half of 2014, bringing its dealership network in Vietnam to 26 nationwide.

In addition, according to VAMA's report, many luxury car brands such as Mercedes-Benz, Lexus, and imported cars from South Korea and Taiwan also achieved quite good sales figures.

According to research conducted at car showrooms in Hanoi such as Toyota Hoan Kiem, Luxury Cars, and Thai Hoan Auto..., the automotive market is recovering after a sluggish first three months of the year, with growth seen in both domestic and imported brands.

According to a representative from Thai Hoan Auto, the showroom sees a higher number of customers browsing and viewing cars each day compared to the beginning of the year. Sales have improved, averaging around two cars per day.

According to Vietnam Auto Showroom - Nguyen Van Cu, Hanoi, sales of this unit have also increased by about 20% compared to the beginning of the year and the same period in 2013.

The majority of buyers are focused on 5-seater family cars such as Vios, Kia, or Honda models... priced from 400 to 600 million VND per vehicle.

Mr. Do Huu Hao, former Deputy Minister of Industry and Trade, commented that the automotive market has gone through a difficult period and is currently showing signs of recovery, which is a welcome sign.

The market has been warming up in recent months due to banks supporting customers in buying cars and simplifying procedures. In addition, policies reducing import taxes and registration fees since the beginning of the year have also had a positive impact on this market.

Motorcycles are a slow-moving market.

In contrast to the vibrant car market, the motorcycle market seems to be showing signs of saturation and declining.

Many shop owners and dealers agree that, despite the release of numerous new models with superior features by motorcycle manufacturers, sales remain low. Surveys conducted on streets such as Ba Trieu, Hue, and Thai Ha in Hanoi show that most motorcycle shops are experiencing a lack of customers and are facing business difficulties.

According to Mr. Nguyen Huu Long, representative of the Imported Motorcycle store on Hue Street, the store has only sold a little over a dozen motorcycles in the past month, much slower than in 2012 and early 2013.

He also noted that the motorcycle market is currently saturated, and consumers are trending towards smaller, more fuel-efficient vehicles such as bicycles and electric bicycles.

Meanwhile, in the first half of this year, motorcycle manufacturers such as Honda and Yamaha have launched many new models, such as the Future 2014, Exciter 2014, Sirius, Jupiter Fi, and Wave 110 Fi, with new designs and prices ranging from 20 to 40 million VND per unit, along with various customer support programs.

However, sales remain sluggish. Ms. Thu Huong, a saleswoman at Le Hang motorcycle dealership, said that in previous years at this time, the dealership could sell 40-50 motorcycles per month. Many new models have been launched recently, but with the current difficult market conditions, sales will likely remain low.

Upon investigation, most shops and dealerships on Hue Street, Ba Trieu Street, etc., are experiencing inventory issues; they have many vehicles in stock but very few customers, and sales revenue is insufficient to cover expenses.

The used motorbike market segment is also experiencing sluggish sales. Tran Son, a motorbike broker at the Chua Ha Street motorbike market, said that business this year is very slow, with sales slowing down; even with the best efforts, he only manages to sell 2-3 motorbikes a week.

Besides that, expenses such as rent and staff salaries still have to be maintained. "Many shop owners on Chua Ha Street have already sold their shops or switched to other businesses. If this situation continues, closing down or liquidating the shops will be unavoidable," complained Mr. Son.

Commenting on this situation, Mr. Hao said that the motorcycle market has now entered a period of "supply" exceeding "demand". The market has become sluggish not only due to economic factors or tightened consumer spending, but simply because most people in cities no longer have the need to buy more motorcycles.

According to Vietnam+