Market for luxury cars growing in Vietnam

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Record sales reported at the country's biggest automobile exhibition confirms businesses' confidence in the growth of Vietnam's market for luxury cars

Luxury cars parking on a street in downtown Hanoi. The market of luxury cars is developing rapidly in Vietnam.Photo by Ngoc Thang

The 2013 Vietnam Motor Show October 23-27 in Ho Chi Minh City attracted 155,300 visitors and saw the sale of 200 cars.

Both figures were the highest since the annual event was first held in 2005 by the Vietnam Automobile Manufacturers Association (VAMA), Thoi Bao Kinh Te Saigon (Saigon Times) Online reported.

This year the event was notable for the attendance of many luxury brands such as Mercedes-Benz, Audi, BMW, as well as Infiniti and Lexus, which made their first appearance at the show.

The cars sold at the show were priced between VND1.7-5 billion (US$80,400-236,600) each, even though Vietnam's 2012 annual income per capita is only $1,555, and the local economy is now in trouble, VietNamNet online newspaper reported.

German-owned Mercedes-Benz Vietnam said it sold more than 100 units, including all ten models it brought to the show.

Among them was the S500, priced at VND4.6 billion, the newspaper reported, adding that three units were sold, even though only one was available at the exhibition.

British car maker Range Rover's sales were much lower, but all were luxury models: six units of the new Range Rover Sport priced at VND4.5 billion each, four new Range Rovers at VND5 billion each, and three Range Rover Evoques at VND2.5 billion.

BMW Euro Auto, the authorized importer of German-owned manufacturer BMW in Vietnam, did not reveal the number of orders it received.

But a representative was quoted by Saigon Times Online as saying that all five of its latest models, including the BMW X6 and BMW Series 4 Coupé (428i), with prices of around VND1.2-3.9 billion each, sold out at the exhibition.

In the meantime, German-owned manufacturer Audi sold 28 units, and Japan's Toyota sold around 30 units from its Lexus luxury division.

Another luxury brand from Japan, Infiniti (by Nissan), also reported that it received many orders for the models it displayed at the show, the QX70 and QX80, VietNamNet reported.

Saigon Times Online said the event's total sales could be higher than 200, as many automakers and distributors said they had yet to finalize their statistics.

Buyers' trends

The fifth annual Vietnam Sales Satisfaction Index (SSI) released by J.D. Power Asia Pacific found that offering a test drive to new-vehicle buyers who visit a dealership in Vietnam increases customer satisfaction with the sales process. The study surveyed 922 new-vehicle owners who purchased their vehicle between October 2012 and July 2013.

According to the study, friends and family are the most popular sources of information for new-vehicle shoppers (89 percent). However, 78 percent of new-vehicle shoppers in Vietnam use the Internet to research vehicle makes and models, up from 61 percent in 2012.

Among the six brands ranked in the study, Hyundai ranked highest in overall sales satisfaction with a score of 856, up 8 points from 2012. Honda ranks second (853), followed by Toyota (852).

Growing market

The Doanh nhan Sai Gon (Saigon businessmen) magazine last month reported that every year the market for luxury cars in Vietnam consumes between 3,000-5,000 units.

Last year, the market's combined sales totaled nearly 4,000 units, of which Mercedes-Benz accounted for more than 50 percent, followed by BMW and Audi.

Mercedes-Benz Vietnam saw an increase of 70 percent in its sales for the first eight months, compared to the same period last year, according to the news report.

BMW and Audi also recorded double-digit growth.

Smaller market share holders like Prestige Sports Cars Ltd.,Co., the importer and distributor of German-owned Porsche, has sold 90 units, each costing as much as VND10 billion ($473,300), since the beginning of this year. It is expected to record the sales of more than 100 by the year's end.

Andreas Klingler, general director of Porsche Vietnam, told the magazine that Vietnam is a small market but has the potential to grow.

He said that the Vietnamese market volume for automobiles was only 100,000 per year right now, but it would eventually hit one-two million units a year, and the sales of luxury cars will increase as well.

The luxury car market will soon see harsher competition as more brands are entering Vietnam like Bentley, Lamborghini, Infiniti, Lexus, and super luxury brands such as Rolls-Royce, Tran Tan Trung, general director of Lien A International JSC, Audi's distributor in Vietnam, said.

France's Peugeot returned to Vietnam in April with Truong Hai Auto Company as its distributor after a 38-year delay.

In June, Rolls-Royce named Truong Hai and Regal Joint-stock Company its distributors and is currently planning to open its showroom in Hanoi this quarter.

Meanwhile, the magazine quoted a representative of Nissan as saying that the Japanese automaker's Infiniti will officially enter Vietnam after its presence at the last exhibition.

Yoshihisa Maruta, general director of Toyota Vietnam, which will bring Lexus into Vietnam, said that although Vietnam's income per capita is lower than that of Thailand and Indonesia, here many people are willing to buy luxury cars, making Vietnam a promising market.

"The higher people's living standard becomes, the more they demand top quality products. With the Vietnamese economy growing, the market for luxury cars here will continue growing," Trung said.

Hal Serudin, Rolls-Royce Motor Cars Limited's Asia Pacific corporate communications manager, said the Asian market, particularly the Southeast Asian one, is very high on the interest radar of Rolls-Royce.

"It is regarded as a key growth area for Rolls-Royce Motor Cars. Asia Pacific sales in 2012 increased by 18 percent, with Singapore, Thailand, Indonesia and Malaysia contributing to growth," he told Vietweek, adding that his company has established dealers in the key emerging markets of Philippines and Vietnam.

Serudin said it was too early to say that Vietnam has emerged as a lucrative market for Roll-Royce.

"However, based on the number of Rolls-Royce cars that are already in the market and current interest in our brand reported by our dealer, we believe there is solid demand for our cars. We have said before that the economy of 90 million people has created a number of highly successful entrepreneurs."

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