Vietnam's luxury car market, delicious but hard to swallow

Vietnam is a potential destination for the world's luxury car giants. With an average growth rate of 40 to 100%/year.

Sales Explosion

The statistics of the whole market in 2014 and the first 6 months of 2015 paint a pretty bright picture for luxury car giants with double-digit positive growth.

Not long ago, foreign media even estimated that Vietnam's demand for luxury cars would soon surpass Singapore's thanks to credit easing and positive signs of the economy.

Specifically, citing a report on the growth figures of the automobile industry in Southeast Asia, the Straits Times newspaper stated that sales of luxury cars in Vietnam in 2014 were 37.6% and are forecast to reach 19.9% ​​this year. Major car manufacturers are also competing to announce bright figures in the first months of 2015.

For example, at a press conference to launch a new car, a representative of Audi Vietnam optimistically shared that 2014's sales growth reached 30% and confidently expected the double-digit growth to continue in 2015.

Similarly, Mercedes-Benz Global also confirmed that Vietnam is the fastest growing market in Asia and the second fastest in the world for the “three-pointed star” brand.

Although newly entering the market, Land Rover - Jaguar also announced impressive sales figures such as the expectation of selling 400 cars in 2015, an increase of 100% compared to the same period last year.

Not only the official distributors, some luxury car importers are also marking their return after a period of absence due to Circular 20. This reappearance is demonstrated through the series of supercars and unique cars such as Ferrari F12 Berlinetta, BMW i8,... continuously brought into the country in recent times.

The number of imported cars and import turnover both grew strongly. According to the latest data from the General Statistics Office (Ministry of Planning and Investment), the number of imported cars in the first 6 months of the year continued to increase strongly, with 57 thousand cars and a turnover value of 1.55 billion USD, up 121.6% in volume and 186% in value compared to the same period last year.

The war is getting fiercer

However, although the entire market is booming in sales, competition between luxury car giants is increasingly fierce.

If 4-5 years ago, when talking about luxury cars, people only mentioned a few German car brands such as Mercedes-Benz, BMW or Audi, now the war has been "internationalized" with more choices in terms of price and brand.

The luxury car market also began to have a clearer differentiation in terms of class when brands such as Rolls-Royce, Bentley, Lamborghini, Jaguar, and Infiniti officially entered the Vietnamese market.

To increase sales, the price and segment boundaries have also been expanded. The three German car giants Mercedes-Benz, BMW and Audi have brought to the country models with "softer" prices to encroach on the market share of lower-end brands.

Therefore, popular car lines such as Toyota Camry, Honda Accord or Mazda6 now not only have to "compete" with each other but are also "threatened" for market share from higher-end car lines such as BMW 3 Series, Mercedes-Benz C-Class or Audi A3,...

More luxurious car lines such as Mercedes-Benz S-Class, BMW 7 Series also had to adjust prices to increase competitiveness. Along with that, new segments such as small luxury SUVs, sedans and small luxury hatchbacks (5 doors) with names such as Lexus NX 200t, Mercedes CLA, BMW i218 or Audi A3 were also brought to the country.

On the "upper" side, the class war between Rolls-Royce and Bentley is also fierce.

The emergence of many new names helps the rich Vietnamese have more choices but also makes car companies have more headaches in the battle to attract consumers. In addition to price factors, a series of customer care issues, creating differences in class are all mobilized to increase competition. Besides, "opening the door" for non-genuine imported cars also makes the billion-dollar car race increasingly fierce.

In fact, the profit on each luxury car is very large, up to 20-25% of the car's value, equivalent to several hundred million to billions of dong, so the cake from this segment is extremely attractive.

However, the initial investment costs from factories, equipment to commitments to parent corporations of most luxury car brands are very "huge". Besides, because it targets a small and quite specialized group of customers, this market is very sensitive to economic and policy fluctuations.

Currently, information about the possibility of adjusting taxes and fees, especially special consumption tax, for luxury cars with large capacity is causing many luxury car brands to worry because this adjustment will push up car prices, especially super luxury cars, which are already at sky-high levels.

According to Labor