The Car-Buying Power Surge

Vietnam’s Auto Sales See a Boost in September-November 2024 Due to Reduced Registration Fees

The Vietnamese auto market experienced a significant rebound in sales during September-November 2024, attributed to the government’s decision to temporarily reduce registration fees for domestically produced and assembled vehicles. This stimulus provided a much-needed boost to the industry, which had been facing a slump, with sales hitting a low of 11,633 units in February 2024, and monthly sales ranging between 24,000 and 28,000 units in the subsequent period, still relatively low compared to the 25,000-39,000 units sold monthly in 2023.

A Timely Boost

The policy change, which took effect in September and lasted through November, offered a 50% reduction in registration fees. This incentive had an immediate impact, as reflected in the sales figures from the Vietnam Automobile Manufacturers’ Association (VAMA). In September, VAMA members reported sales of 36,585 units, a 45% increase compared to the previous month. This upward trend continued in October, with sales climbing to 38,761 units.

Interestingly, there was a shift in the market dynamics during this period. In the earlier months of the year, imported completely built-up (CBU) vehicles outsold domestically produced and assembled cars. However, in September, the trend reversed, with 19,500 locally produced and assembled cars sold compared to 17,085 imported CBU units. This trend continued in October, with sales of domestic cars reaching 21,113, while imported CBU sales stood at 17,648 units.

Mr. Chau Van Thanh, a car dealership manager in Thu Duc City, Ho Chi Minh City, predicts that sales will remain strong in November as it is the last month to take advantage of the reduced registration fees. He believes that customers who have been hesitant will likely make their purchases before the incentive ends.

At a Honda dealership in District 10, Ho Chi Minh City, sales staff reported a significant increase in foot traffic and sales compared to the earlier months of the year. Many customers were quick to make purchases, having already decided on their preferred models, and were simply waiting for price reductions or tax incentives. In addition to the 50% reduction in registration fees, some models were also offered with discounts of up to VND 80 million, making them even more attractive to buyers.

A Kia dealership in Thu Duc City also reported limited stock for certain models, with some colors and versions already sold out. Kia has also joined the price reduction trend, offering discounts of up to VND 90 million per car, which has significantly boosted sales.

Concerns for the Year-End Market

Mr. Chau Van Thanh expressed concerns about the market’s performance in December 2024 and beyond. Typically, the market experiences a surge in sales during the last months of the lunar year due to increased demand for vehicles during the Tet holiday season. However, the abrupt end to the registration fee incentive in November may dampen the market’s performance.

According to Mr. Dao Cong Quyet, a VAMA representative, the surge in sales over the past two months can be attributed to customers who had been waiting for such incentives. Although there were indications as early as July that the government would introduce stimulus measures, the official announcement and implementation did not come until September. After a long wait, customers rushed to take advantage of the reduced registration fees, valid only for three months. As a result, Mr. Quyet predicts that the market will slow down in December, especially with the proximity of the lunar new year in December this year.

Contrarily, Mr. Pham Quang Thang, Sales Director of Hanoi Automobile Company, believes that year-end auto sales are not solely dependent on government incentives. He argues that the year-end buyers are those with genuine needs and intentions to purchase, and their decisions are not heavily influenced by registration fee reductions. Mr. Thang is confident that sales will remain strong in December as automakers will continue to offer various incentives, possibly even exceeding the 50% registration fee discount, to clear their inventories and make way for new models.