The imported automobile market has been looking gloomy since early this year. As a result, car importers are struggling with the decline in sales and are suffering with lower benefits and losses.
Even with the higher registration fees that are to be introduced in June, potential buyers have not been persuaded to buy cars before this imposition takes effect. This has left the market at a standstill.
"Car traders are finding it difficult at the moment. People are pouring money into real estate and stocks, they are not purchasing cars," Nguyen Ngoc Tu, director of the car dealership Hoang Tuan, told Thanh Nien Weekly.
In April, the firm sold only a handful of the cars. "The number of cars we have sold is less than one-tenth this time last year."
Tu's dealership has not imported any cars since early this year, and has sold only those already in stock. The company has dozens of cars on its inventory, and Tu is finding it hard to find ways to promote sales to recoup capital.
Vu Quang Tuan, from the business department of the car dealership Thang Loi, said lower purchasing power has caused difficulties for car dealers. The number of cars sold every month is down 50 percent from the end of 2009. As a result, his company has imported less automobiles, and focused more on selling cars with mid-range prices, from US$31,000 to 37,000 per vehicle, instead of luxury ones like before.
Le Vo Ngoc Son, a salesman at the car dealership Dai Vong in Ho Chi Minh City, said most car dealers complained about the downturn in the market. His firm now sells only four to five cars a month, compared to some 20 last year. Dai Vong still has 40 cars in stock. Son went on to say that his company imported cars late last year, when the Vietnamese dong was weak against the US dollar. Now, the value of the dollar is down, resulting in a substantial loss for his company. "The fluctuation in foreign exchange rates means we incur a loss of VND40 million ($2,100) for each Sedan Venza we sell."
Nearly 11,000 cars were imported into Vietnam in the first four months of 2010, the lowest level in three years. The number of imported cars with less than nine seats was recorded at around 7,000 units in the four-month period, which according to the General Department of Customs is lower than monthly figures last year.
The strength of the US dollar compared to the Vietnamese dong late last year raised the import prices of cars and so they have become less attractive to customers. The recent recalls of cars from well-known producers, including Toyota, due to problems have also caused Vietnamese customers to shy away from buying imported vehicles.
The Vietnamese government has tried to curb car imports in an attempt to narrow the trade deficit.
The Ministry of Finance has allowed localities to raise maximum registration fees to 15 percent from June 10. Hanoi and HCMC are now imposing fees of 12 percent, while other cities and provinces are at 10 percent.
Despite the sluggish imported automobile sales, the local market is still bright. Last month, according to the Vietnam Automobile Manufacturers Association, locally produced Vietnamese automobile sales were up 23 percent from the same month in 2009 to 9,551 units after falling an annual 16 percent in March. In the first four months of this year, sales saw a year-on-year increase of 5 percent.
Tran Bao Ngoc, from Dong Da District in Hanoi, claims he will buy a locally-produced Sedan. "The price of a locally-made car is much lower than that of an imported vehicle of the same type. Moreover, I, after the recent problems of Toyota, dare not buy imported cars," he says.