Jan auto sales increase 76%

VietNamNet Bridge – Sales of locally assembled automobiles in Vietnam in the first month of the year picked up 76% year-on-year to over 6,960 units, according to a recent report from the Vietnam Automobile Manufacturers Association (VAMA).

Despite the market slump last year, the auto market still noted an increase in sales volume with 119,460 units in 2009, year-on-year growth of 7%.

Foreign and domestic manufacturers that reported a rise in sales included Toyota Vietnam, Ford Vietnam, GM Daewoo, Mercedes-Benz Vietnam, Visuco (Suzuki), Hino, Truong Hai, Vinaxuki and Vinamotor.

Toyota led the pack with 2,212 units, up 109% for 31.8% of the market, followed by GM Daewoo, 629 units, up 23%, Ford Vietnam, 373 units, up 7%, Visuco, 173 units, up 119% and Mercedes-Benz Vietnam, 159 units, up 20%.

Domestic producers Vinaxuki and Truong Hai registered 133% and 132% year-on-year increases in sales to 721 and 822 units respectively last month. Vinamotor sales leapt 200% year-on-year to 248 units.

However, total sales volume of VAMA members last month fell 53.8% in comparison with December, according to the association.

The auto industry this year will face extra difficulties as vehicle registration fees will be adjusted up to 10%-12% from the previous 5%-6%. Automakers and auto importers early this year announced new prices since the VAT on automobiles was doubled from 5% to 10% on January 1.

Despite the market slump last year, the auto market (from VAMA) still noted an increase in sales volume with 119,460 units in 2009, year-on-year growth of 7%.

Two segments that were major drivers for growth last year were passenger cars which grew by 47% year-on-year and MPV/SUVs which rose 3%.

Last year, automakers attributed the improvement in car consumption to the Government’s proactive measures such as 50% VAT and 50% ownership tax reductions. The auto registration fee was down to 5-6% of the list price, boosting sales and helping the industry cope with the local economic slowdown resulting from the global recession. But in 2010 some tax incentives have been removed.

Udo Loersch, general director of Mercedes-Benz Vietnam and vice chairman of VAMA, said that last year Mercedes-Benz Vietnam also posted a new record of 3,400 cars, with an 80% increase for passenger cars. This shows demand for cars, especially luxury brands, in Vietnam is high and increasing.

However, taxes for autos (VAT & registration fee) have been doubled. This will create significant challenges for auto makers and customers. “It is not easy to predict the market but we will hope for an increase in 2010. Another challenge is the dificulty to get loans for the customers, but here we expect the Government will find solutions to improve the situation,” Loersch said.

Meanwhile, Honda Vietnam forecast that the auto market this year would decrease 10%-20% year-on-year. Toyota Vietnam forecast the auto market in 2010 would reduce because of the new taxes and fees.

* The import value of automobiles in the first month of this year reached only US$45 million, a 76.4% decrease compared to December, according to the General Statistics Office (GSO).

The country imported 2,500 automobiles, down 77.3% against the previous month. As many as 11,000 automobiles worth US$192 million were imported in December.

The GSO said the sharp decrease was a common trend as the first two months of the year often saw a sharp reduction in car imports due to decreasing demand from the domestic market.

Industry insiders also attributed the sharp decrease to the impact of the Government’s decision to remove tax incentives from the auto industry. After months of enjoying a VAT and car registration discount, car buyers now have to pay additional charges that are estimated to increase the cost of buying a car by roughly 10-12%.

Automakers said the domestic automobile market would suffer over the first few months of the year due to the higher costs. However, it was expected to rebound at the end of the year so that total sales would match those of last year.

Last year, the country recorded imports of roughly 76,300 automobiles worth more than US$1.17 billion, up 49.4% and 12.6% respectively from 2008, the GSO reported.

Industry insiders forecast that automobile imports in February would continue to drop.

VietNamNet/SGT