Downsizing Market Drives down Auto Output by 40 per cent

Total automobile output in Vietnam is estimated to decrease 40 per cent on year in the first quarter of this year to 7,091 units principally due to slow domestic sales, according to the government's General Statistics Office (GSO).

 

In March alone, the automotive industry is projected to turn out 2,653 units, down 40.8 per cent on year but up 21.59 per cent on month.

 

An authority in the Ministry of Industry said, "Continuous falls in sales in recent months have forced carmakers in the country to cut production."

 

"Most automakers hardly sell cars due to the government’s decision to reduce import tariff and special consumption tax on imported band-new cars because local potential buyers are awaiting deeper slashes in car prices in the coming time," a local carmaker revealed in sorrow.

 

In addition, the permission to import used cars from May has further prompted them to delay their purchasing decisions, he said.

 

Toyota has let 50 factories workers off work while still paying them a 70 per cent salary. Meanwhile, Isuzu has asked all 300 factories workers to temporarily to stay at home since mid-February due to unmarketable situations.

 

“We hope the newly submitted proposal concerning taxes on used car importation from the Ministry of Finance to the Government will help the automotive market bounce back in the coming time,” an automaker said.

 

According to the Ministry of Finance Proposal, a secondhand car may be levied taxes of over 600 per cent when they are available on the Vietnamese market.

 

Since the beginning of this year, most automobile manufacturers in Vietnam, including Toyota, Ford, Mitsubishi and GM-Daewoo, have reduced their car prices and offered handsome sales promotions in an effort to heat up the Vietnamese freezing auto market.

 

However, according to the Vietnam Automobile Manufacturers Association (VAMA), sales by 11 operational foreign-led carmakers in Vietnam still fell 21 per cent to 2,984 units in January and February of this year.

 

With a fledging auto industry, all carmakers in the country have to import parts for production. They spent around US$80 million on car parts in the January-March period.

 

Last year, the auto industry turned out nearly 65,000 units, up over 30 per cent on year.