Foreign Carmakers Continue Suffering Sales Drop due to Taxes

1:58:35 PM | 3/10/2006

Car sales by 11 foreign-backed automakers in Vietnam were down 21 per cent on year in the first two months of this year to 2,984 units although February sales increased 5 per cent on year to 1,467, said the Vietnam Automobile Manufacturers Association (VAMA).

Car sales in the country have kept falling since the middle of 2005 when the Vietnamese government planned to issue many new policies that might drive car prices in the country down.

Tax policies are the first core reason for consecutive monthly sales falls, a VAMA member company said.

The government’s decisions to reduce the import tariff and special consumption tax by 10 per cent and 30 per cent to 90 per cent and 50 per cent, respectively, this year have prompted potential buyers to delay purchases in a hope to buy lower-priced cars.

In addition, the government’s recent decision to allow the import of used cars from May has delayed potential buyers decisions further as they wait for even lower car prices, said the company.

“Imported used cars will force car manufacturers to further reduce car prices to compete with foreign ones,” a car hunter said. At present, car prices in Vietnam are reported to be at least 1.5-2 times higher than the regional average.

Since the government agreed to allow used car imports last month, many foreign-backed carmakers including Toyota, Ford and Mitsubishi discounted their car prices to attract buyers.

Toyota continued dominating the Vietnamese car market in the two months with sales of 1,470 cars, holding 49.3 per cent of the market share. Toyota’s domination was mainly attributed to aggressive rebates and new economical models, including the Innova crossover vehicle.

Ford still kept second place with sales of 548 units in January and February, up 13.5 per cent on year. The US-invested carmaker held 18.4 per cent of market share.

Vinastar, a branch of Mitsubishi Motor Corp., suffered the deepest slash with 80.7 per cent to 79 autos while Vidanco, a branch of Daihatsu Motor Co., enjoyed the highest sales of 107.7 per cent to 54 cars.

* The following table details car sales, market shares and the growth of the 11 foreign-invested carmakers in Vietnam in February and in the January-February period.

No.	Maker	February 2006			January-February 2006
No.	Maker	Sales (units)	Share (%)	Growth (%)	Sales (units)	Share (%)	Growth (%)
1	Toyota	659	44.9	+25.3	1,470	49.3	+18.8
2	Ford	281	19.2	+56.1	548	18.4	+13.5
3	Vidamco	104	7.1	-49.5	215	7.2	-67.3
4	Visuco	104	7.1	-37.0	142	4.8	-58.8
5	Isuzu	80	5.5	+70.2	179	6.0	+0.6
6	Vinastar	63	4.3	-13.7	79	2.6	-80.7
7	Hino	44	3.0	+10.0	88	2.9	+10.0
8	Mercedes	43	2.9	-16	64	2.1	-61.0
9	Mekong	37	2.5	-51.9	104	3.5	-17.5
10	Vindaco	28	1.9	+133.3	54	1.8	+107.7
11	VMC	24	1.6	+14.3	41	1.4	-32.8
	Total	1,467	100	+5	2,984	100	-21

(VAMA Release)

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