New vehicle sales in Vietnam surge Q1 2019
New vehicle sales in Vietnam surged 52.9% y/y to 32,308 units during March, according to data released by the Vietnam Automobile Manufacturers' Association (VAMA). This figure includes locally produced passenger vehicles, commercial vehicles (CVs), and special-purpose vehicles (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; thus their volumes are amalgamated into the total vehicle market. Passenger vehicle sales in the country during March grew by 75.2% y/y to 22,528 units and CV sales went up by 28.3% y/y to 8,917 units. Sales of SPVs in March went down by 34.6% y/y to 863 units. Meanwhile, sales of locally built vehicles grew 44.9% y/y to 30,055 units in March, with passenger vehicle sales at 21,760 units (up 74.2% y/y) and CV sales at 7,771 units (up 11.5% y/y). Within the CV category, sales in the truck segment increased 15.8% y/y to 6,778 units, while sales of buses went down by 11.3% y/y to 993 units. Sales of SPVs slumped 59.1% y/y to 524 units.
Outlook and implications
The increase in the Vietnamese new vehicle market during the first quarter of 2019 can be attributed to strong growth in passenger vehicle sales, as well as a slight improvement in CV sales, thanks to a low base of comparison and a reduction in special consumption tax (SCT). 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 SCT, new model launches, and an improvement in the country's economy. Industrial production will continue to play an integral role in driving Vietnam's economy. Given Vietnam'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. IHS Markit anticipates that Vietnam's real GDP growth will average 6.7% during the next few years. We expect the Vietnamese light-vehicle market to grow by around 5.4% y/y to 267,794 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. This segment is expected to grow by 1.4% y/y to 93,233 units this year, giving it a market share of 34.8%. The sedan body type will be followed by sport utility vehicles with sales of 59,198 units, up 7.1% y/y, capturing a market share of 22.1%. Hatchbacks will follow as the third-largest category in 2019 with a market share of 14.2% and sales of 38,017 units, up 12.4% 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