New vehicle sales in Vietnam surge over 21 percent in first half of 2019
[Excerpt - vehicle model details available with full subscription]
New vehicle sales in Vietnam surged 18.6% y/y in June to 27,520 units, according to data released by the Vietnam Automobile Manufacturers' Association (VAMA). This figure includes locally produced passenger vehicles, CVs, and SPVs from 20 VAMA members, as well as completely built-up (CBU) imports, but excludes bus chassis units. SPVs are either passenger vehicles or CVs already fitted out for their purpose; therefore their volumes are amalgamated into the total vehicle market. Passenger vehicle sales in the country during June jumped 31.5% y/y to 20,287 units and CV sales decreased 9.0% y/y to 6,649 units. Sales of SPVs fell by 23.5% y/y to 584 units during the month.
Meanwhile, sales of locally built vehicles increased by 22.2% y/y to 26,207 units in June, with passenger vehicle sales at 19,725 units (up 33.3% y/y) and CV sales remaining flat at 6,270 units. Within the CV category, sales in the truck segment increased 2.2% y/y to 5,426 units, while sales of buses went down by 12.3% y/y to 844 units. Sales of SPVs slumped 44.9% y/y to 212 units.
During the first half of 2019, sales of locally produced vehicles in the country were up 18.4% y/y at 145,811 units, with passenger vehicle sales up 32.8% y/y at 109,423 units and CV sales down 5.9% y/y at 34,581 units. Within the CV category, sales in the truck segment declined 2.8% y/y to 30,131 units, while sales of buses were down 22.5% y/y at 4,450 units. SPV sales in the period plunged 54.7% y/y to 1,807 units. Total industry sales during the January-June period were up 21.3% y/y at 154,273 units. Total passenger vehicle sales during the period grew 34.6% y/y to 113,155 units, while CV sales stood at 38,071 units (down 1.5% y/y) and SPV sales fell by 32.1% y/y to 3,047 units.
Outlook and implications
The surge in new vehicle sales in Vietnam during the first half of 2019 can be attributed to strong growth in passenger vehicle sales thanks to the reduction in SCT and a low base of comparison. However, sluggish demand for CVs and SPVs did weigh down on the first-half results somewhat. Beginning in 2018, the Vietnamese government reduced SCT on vehicles with an engine size of 2.0 litres or less by 5%. The government also reduced import tariffs on automotive components from the Association of Southeast Asian Nations (ASEAN) region to 0%. Therefore, the average tax on automotive components is now about 5%, down from 15% last year, resulting in lower production costs and hence vehicle prices.
IHS Markit expects light-vehicle sales in the country, including passenger vehicles and light commercial vehicles, to be driven in 2019 by the reduction in the SCT, new model launches, the expansion of the dealership network in the country, and an improvement in the economy. Industrial production will continue to play an integral role in driving Vietnam's economy. Given the country's large labour force, relatively low wages, and favourable geographical location, we project a healthy pipeline of foreign direct investment (FDI) inflows in the near to medium term. We anticipate that Vietnamese real GDP growth will average 6.7% during the next few years. We expect the Vietnamese light-vehicle market to grow by around 12.7% y/y to 286,281 units in 2019.
Sedans will remain the most popular body type in the country in 2019. They are popular among Vietnamese consumers as they are perceived as conferring a higher social status. However, this segment is expected to witness only moderate growth of 1.7% y/y to 93,492 units this year, giving it a market share of 32.7%, mainly due to the growing popularity of sport utility vehicles (SUVs). Automakers plan to bring out new SUVs in Vietnam in a bid to tap into this growing opportunity. Our data show that around 11 new or refreshed SUVs will be launched in Vietnam in 2019. Hatchbacks will follow as the third-largest category in 2019 with a market share of 14.4% and sales of 41,327 units, up 22.1% y/y.
Read more articles like this one. Get a free trial to AutoIntelligence Daily
- Daimler discusses ‘organic’ battery research and development programme
- Automotive Rapid Response Report - 31 March 2020
- Beijing offers incentives to scrap high-emission vehicles
- Researchers in US developing new technology for fast charging batteries
- COVID-19 Pandemic Impact on Automotive Suppliers
- Coronavirus Impact on Global Auto Demand
- Automotive Rapid Response Report - 25 March 2020
- European automotive industry helps in COVID-19 response
Daimler is working on advanced, 'organic' electric vehicle (EV) battery technology. The company describes the techn… https://t.co/MQsmwqnJSO