Falling petrol prices, longer financing arrangements and rising consumer confidence are pushing Vietnamese car buyers towards bigger and more expensive cars.
|A gas station employee fills up a car (Photo: autovn911.com)|
Offering fresh evidence of a sustained rebound in the Vietnamese automotive industry, most major manufacturers saw multi-year highs or all-time highs in sales volume last month, according to figures from the manufacturers which were released on November 13.
Last month, the country's 18 leading vehicle manufacturers sold a combined total of 14,938 units, a 45-percent year-on-year increase, according to the Vietnam Automobile Manufacturers Association (VAMA).
Of this figure, cars made up 9,220 units and trucks, 5,718 units. The VAMA data includes SUVs, passenger cars and commercial vehicles.
"This is the 19th consecutive month that industry volume has been higher than that of the same period last year," VAMA chairman Jesus Metelo Arias said in a statement released on November 13.
Meanwhile, sales from January to October increased by 40 percent year-on-year to 121,648 units. Of these, cars made up 77,150 units, a four-percent increase year-on-year, and trucks, 44,498 units, a 38-percent year-on-year increase.
"Lower fuel prices are partly responsible for the continued strength of auto sales," said Luong Dinh Hung, General Director of ASC Group, a prominent car dealer in Vietnam.
Hung cited additional factors contributing to strong demand such as longer financing arrangements, increased consumer confidence and continued pent-up demand, as consumers replaced old vehicles with new ones.
Last week, the prices of RON 92 and RON 95 gasoline were cut by VND 950 (US$ 4.5 cents) to VND21,390 (US$1.007) and VND21,990 (US$1.047) per litre, respectively.
This is the ninth time petrol prices were reduced and the 14th time the prices were adjusted this year. As a result, current petrol prices are equivalent to those in 2012.
Also, a large number of vehicles that will become obsolete this year also helped trigger demand, as the Government required the removal of trucks more than 25 years old and cars more than 20 years old from the country's roads.
According to the Vietnam Register, a total of 3,388 cars, 13,033 trucks and 67 buses will be taken off the roads this year.
A brighter economic outlook also helped to improve consumer sentiment, as Vietnam's economic growth rate in 2014 was set at 5.8 per cent and CPI growth at less than seven percent.
The Ministry of Planning and Investment, which set the growth rate, also predicts the country's gross domestic product growth to reach 5.8 percent or even higher this year.
"Dealers are welcoming a consistent flow of shoppers into their showrooms, and the pace will likely remain steady through the end of the year," said Do Ngoc Quang, a car analyst, adding that "the industry is poised for a very busy holiday season."
From January to October, the country imported 51,000 cars worth US$1.1 billion, a 76-percent increase in quantity and 93-percent increase in value year-on-year, according to the General Office of Statistics.
The figures nearly doubled those of 2013 and registered the highest level in the last five years.
Vietnam, which has a population of more than 90 million, has around two million cars and 37 million motorcycles.