Auto industry retains optimism despite gloom

The auto market continues to be becalmed, but major producers and dealers are hopeful the market will revive soon.

At an auto salon on An Duong Vuong Street in Ho Chi Minh City's District 5 (Photo: SGGP)

The entire year has been a nightmare for them with the last few weeks being especially bad. They have barely been selling of late despite slashing prices and offering freebies.
At this time last year, to buy a car, one had to put down a deposit of 30-50 percent of the price and wait for at least three to six months for delivery.
But a hike in import tax in the early part of this year brought an end to the good times.
An owner of an auto salon on Nguyen Van Cu Street in Ho Chi Minh City’s District 5 said he advertised a 15-20 percent discount on cost price for his remaining 12 autos, but has received no inquiries.
He said he owned three salons and imported 30-40 vehicles per month at tens of billions of dollars, 70 percent of which he borrowed from banks. Recently he had to sell one of the salons to repay the bank, he said.
“I hoped to sell my remaining 20 cars by year-end, but I no longer have hope because I have sold only one car in more than a month,” he added.
Vo Thanh Hung, owner of Hoang Hung auto salon in District 10, said after the import duty on auto increased from 60 percent to 83 percent, registration fees increased from 2-5 percent to 10 percent, and banks raised lending rates to above 20 percent, many dealers were unable to sell their autos and had to sell them to other dealers at rather low prices.
For instance, he said, a salon had offered a 2009 Camry LE for US$60,000, which was almost $4,000 cheaper than the original price. A week later another offered the same one at $55,000-57,000.
As for locally-made cars, figures from the Vietnam Automobile Manufacturers’ Association (VAMA) show that member-companies sold 5,679 units in October, a year-on-year fall of 37 percent.
While importers have largely been going bust, producers and major dealers like Toyota Vietnam and Euro Auto are optimistic the market will revive soon and have built a clutch of swank showrooms.
Huynh Du An, general director of Euro Auto – distributor of BMW in Vietnam -- said the auto market would grow by 20 percent by Tet [on January 26 next year] because demand is still high and dealers usually offer big promotions at the end of the year.
Domestic auto makers have also slashed prices.
Auto analysts said when the country opens up its retail market in early 2009 under its World Trade Organization commitments, many foreign distributors would enter Vietnam.
Some auto companies have also bought strategic stakes in local auto companies, an analyst said, adding it means that they realize the potential of the country’s auto market.
Domestic auto makers, therefore, need to offer reasonable prices and earn customers’ trust before foreign dealers arrive.

By Lac Phong – Translated by Hoang Yen

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