Automobile business stalls in Vietnam hub

Thanh Nien News

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A sales assistant cleans dust off a car at a an auto salon in Ho Chi Minh City. Photo courtesy of Tuoi Tre

Automobile sales in Ho Chi Minh City have been cascading as producers say they’ve not cleared a single item over the past month.
A report from the Vietnam Automobile Manufacturers Association showed that sales in February dropped 46 percent from the previous month to 4,509. The number of imported cars dropped 33 percent from January and those assembled in Vietnam 34 percent, Tuoi Tre newspaper reported.
Many members said some product lines had received no purchases at all in February.
A source from GM Vietnam, a subsidiary of the GM Korea Company, said it only sold eight cars from a Chevrolet line introduced last October in January, and one in February.
The Escape store at Ford Vietnam also went without sales in February, as did the Civic 1.8 MT and Accord lines at Honda Vietnam.
Vietnamese firm Truong Hai meanwhile could not sell a single Forte or Mazda CX5 last month.
General director of a VAMA member company said the firm had basically survived February and March on maintenance services only.
The source said consumers might be tightening their pockets after holiday spending during Tet (Lunar New Year) in late January and early February.
Second-hand car salons are also empty of customers.
At one on Pham Hung Street, the workers' only job recently has been dusting unsold cars.
Khac Thao, owner of another dealership, said he only sold three cars in February, which is “a significant drop” from before Tet.
“Dealers come to offer old cars every day but I can’t sell, so I dare not buy more.”
But the man who has eight years in the business said it wasn't like the problem started yesterday, but it has been getting worse over the past three years.
His colleague Le Duc Toan said the number of buyers has fallen to one third of that before the Lunar New Year, so he’s no longer keen on buying from dealers, possibly only those that are VND700 million or less as they would sell more easily.
Second-hand car investors said they are doing business with bank loans at the interest of 1-1.2 percent a month, not to mention rent of VND20-40 million a month, plus utility bills and staff wages, so slow sales could easily put them in the red.
“If we cannot clear a car that we buy from dealers in three or four months, we surely lose. So we’d immediately take a deal that gives VND5 million profit,” a salon owner said.
Do Minh Ho Hai, director of Xuyen Viet Company which runs a forum that advertises second-hand cars, said he’s received more cars for sale since February. “Normally the forum receives around 40 cars for sale a month, but it has jumped to nearly 70.”
A slow economy plus increasing gasoline prices have prompted many transporters in Da Nang to sell their trucks, though buyers are few.
The vehicles are on show in large amounts on many streets around the central hub, some of them carrying license plates from nearby Quang Ngai Province and Hue.
An interested person stops by once in a while but hardly ever does a transaction occur.
Hung, the owner of a transport business on Ngo Quyen Street, said transporters could hardly survive this stagnant economy, so many had decided to sell their means of business, just like he did.
He’s been trying to sell a one-ton truck he bought at VND270 million several years ago for VND80 million.
“The business saved me some money in the beginning. But it got so bad around a year ago.”

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