Luxury Car Sales Slump: Distributors Face Challenges

Hang Xanh Automobile Service Joint Stock Company (HAX), Vietnam’s largest authorized Mercedes-Benz distributor, has announced its Q3/2025 results, reporting a net revenue of over 1.149 trillion VND, a 25% decline compared to the same period last year. After deducting expenses, HAX incurred a loss of nearly 26 billion VND, marking its first quarterly loss since 2021.

Plummeting Profits

In the first nine months of 2025, HAX’s after-tax profit amounted to just over 1 billion VND, a staggering 99% decrease year-on-year. The primary cause is the sharp decline in luxury car purchases as consumers tighten their spending, coupled with rising selling costs, financial expenses, and inventory levels.

Similarly, Tasco Auto, a major automotive distributor, is facing financial strain. Its mid-year 2025 report revealed an accumulated loss of over 1.8 trillion VND, despite a slight revenue improvement. The company’s liabilities have surged, and borrowing costs remain high.

Recently, Giai Phong Automobile Joint Stock Company reported a Q3/2025 after-tax loss of nearly 11 billion VND, with inventory increasing by over 28 billion VND. Meanwhile, TMT Motors, a company transitioning to assembling and distributing affordable electric vehicles, announced an accumulated loss of 215 billion VND in its semi-annual report. Despite strategic moves into the electric vehicle sector, TMT Motors’ revenue has yet to offset its investment costs.

According to experts, Vietnam’s automotive market is in a “profit compression” phase due to reduced purchasing power. Luxury vehicles are particularly affected by consumer trends and macroeconomic fluctuations. Meanwhile, electric and economy cars face intense price competition among domestic, Japanese, Korean, and Chinese brands. “Rising financial costs, real estate, labor, and inventory are eroding distributors’ profit margins. Many companies are forced to slash prices to stimulate demand, resulting in higher revenue but deeper profit declines,” an analyst noted.

Ms. Nguyen Thi Hien, Director of Hien Auto Chain in Ho Chi Minh City, highlighted that manufacturers impose distribution quotas on dealers without considering their viability. For slow-moving models, manufacturers only offer an additional 1-2% discount, which is insufficient.

Observations show that many luxury car models are being heavily discounted by hundreds of millions of VND. For instance, the 2024 Mercedes-Benz GLC 300 4MATIC has been reduced by approximately 450 million VND, now priced below 2.4 billion VND. Some Audi models offer 50% registration fee support, equivalent to nearly 200 million VND. Despite these efforts, Mercedes-Benz sales dropped by 56%, Audi by 21%, and Volvo by 18% compared to last year.

Challenging Recovery

Mr. Nguyen Xuan Thang, Deputy Sales Director of Hanoi Automobile Joint Stock Company, mentioned that some luxury car dealerships have returned their premises due to a sharp decline in customers. “Previously, luxury cars sold well among business owners seeking to enhance their image, but this customer segment is no longer prevalent. Additionally, many buyers are shifting to high-end electric vehicles priced up to several billion VND,” Mr. Thang explained.

According to Mr. Tran Dinh Ky, Deputy General Director of Moveo New City Joint Stock Company, one reason for the high luxury car inventory is that many models no longer meet consumer needs, as buyers are opting for larger vehicles. “U.S. tariff fluctuations have forced deep price cuts on imported cars before new tariffs take effect, impacting distributors’ sales,” Mr. Ky added.

Ms. Le Thanh Hai, representative of the Vietnam Association of Authorized Auto Importers (VIVA) and General Director of Subaru Vietnam, stated that only vehicles priced below 700-800 million VND are selling. Price reductions have become a trend as customers currently lack the financial means to afford luxury cars.

MSc. Tran Anh Tung, Head of Business Administration at the University of Economics and Finance, Ho Chi Minh City, analyzed that luxury cars have a profit margin of only 5-8%. Deep discounts to clear inventory result in significant losses for distributors and dealers. For car manufacturers, widespread price cuts erode brand value.

“The luxury car market has entered a brutal selection phase. Only brands that quickly reposition themselves toward electrification or offer genuinely premium experiences will maintain profitability. The rest must engage in price wars, leading to capital and brand erosion,” MSc. Tung concluded.