Despite Attractive Promotion, Customers Still Waiting For a Fall in Auto Price

The manufactures persuaded customers that the price of cars would increase in 2006, making it the best time to purchase a car right now (Mercedes even pledged to repay its customers provided that the price of cars falls next year). Will all done, the automobile market is still very quiet.

Many kinds of promotion have been launched

The promotion campaign of Toyota Vietnam is probably the most impressive with “One Zace every week” for all customers who purchase Toyota cars from 1 November to 31 December 2005.

A no less impressive promotion may come from Ford with 5 year-pay instalment plan for the products such as Ford Ranger, Escape and Mondeo. This plan is cooperation between Vietcombank and the qualified customers need to pay only 25% of the car’s value in advance and they are even supported with zero interest in some cases.

Year 2006: the auto price will fall

VAMA declared that the auto price would rise dramatically because the special consumption tax (SCT) imposed on 5 or less seaters would increase from 40% to 50%, from 25% to 30% for cars with 6-15 seats and STC for cars with 16-23 seats would go up from 12.5% to 15%, according to the latest fixed SCT draft submitted to the Congress in November 2005.

However, from the assessment of the market, the above information of VAMA could be “made up” to stimulate the car consumers at the end of the year.

 Regarding this information, Deputy Industry Minister Nguyen Xuan Chuan said that, 10 year ago, in order to develop the local car industry, the Government had many supporting policies for joint ventures, among which were heavy taxes on imported cars. However, in return to the Government’s favors, the prices of joint venture cars were as high as imported ones’.

In 2006, when SCT falls from 80% to 50%, the auto price will definitely drop. A Mercedes - Benz agent in District Tan Binh (Ho Chi Minh City) said that the quantity of car sold was not considerable last month. “The customers just come to ask for the prices, test drive but do not want to buy them. Everybody is waiting for a fall in auto prices next year”.

Experts say that the importers have tried to lower car prices on the invoices; thus, there are some good cars but their prices fluctuate only from USD 8,000 to USD 9,000. Therefore, the auto price will be very attractive regardless of many kinds of tax imposed.

According to these experts, an essential element that also needs to be mentioned is the probability that cheap 5-seat and family Chinese cars begin to join the Vietnamese market.

The quantity of these cars will be certainly higher in 2006 forcing the auto manufacturers in Viet Nam to share the market out of their will.

 Besides, the auto market is thrillingly waiting for the coming of Honda Civic with the hope of a revolution in auto price.

According to the figures of The Vietnam Automobile Manufacturers Association (VAMA), the total quantity of cars sold in November of 11 old members of VAMA was only 2,567, nearly 800 less than the previous month and was just equal to 46.5% compared to the same period last year. This was the lowest rate in the last 8 months.

 Despite still being a leader in the market, the quantity sold of Toyota sold only 647 last month and 460 less than the previous month.
Ford and Vinastar could also sold 500 and 300 cars, 167 and 217 less than the previous month respectively.

From the beginning of this year, 11 companies from VAMA have sold 30,949 cars, 2,000 less than the same period last year.

 Last November, regardless the coming of 5 new members, the number of cars that 11 joint ventures from VAMA sold was only 2,747, which means a decrease of 18% compared to last month and the lowest number from March.