"Catching the wave" of reduced registration fees, consumption of domestically assembled cars is about to increase

According to data just released by the Vietnam Automobile Manufacturers Association (VAMA), the number of vehicles sold in the entire market by member units in June 2024 reached 26,575 vehicles of all types, a slight increase of 3% compared to the previous month and an increase of 12% compared to the same period last year.

Specifically, passenger cars reached 19,944 units, up 9% compared to May 2024; commercial vehicles reached 6,419 units, down 12% and specialized vehicles reached 212 units, down 21%.

In terms of vehicle origin, while the consumption of imported vehicles slowed down to 13,613 units, down 1% compared to the previous month, the number of domestically assembled vehicles reached 12,962 units, up 8% compared to May 2024.

In terms of brand market share rankings in June 2024, Toyota continued to hold the top spot with sales of 5,178 vehicles. Hyundai was still in second place with 5,047 vehicles. Thanks to its good sales performance, Ford remained in third place with 3,307 vehicles. The remaining positions were Mitsubishi (2,913 vehicles), KIA (2,874 vehicles), Mazda (2,562 vehicles), Honda (1,381 vehicles)...

Combining the sales of VAMA and TC Group in June, the entire market consumed a total of 31,622 vehicles of all kinds, bringing the total number of vehicles sold in the first 6 months of 2024 to 159,235 vehicles. On average, the market consumed about 26,539 vehicles per month.

However, the above figures do not fully reflect the Vietnamese auto market because brands such as Audi, Jaguar Land Rover, Mercedes-Benz, Subaru, Volkswagen, Volvo... do not publish business results information.

It can be seen that the consumption of domestically assembled cars has increased by 8% compared to the same period last month, in contrast to the decline in imported cars. Along with that, according to data from the General Statistics Office in June 2024, automobile enterprises are estimated to have assembled 27,200 cars, 200 more than the previous month. This growth started in May when the output increased by more than 1,000 cars compared to April 2024. Since the beginning of the year, manufacturing enterprises are estimated to have produced about 144,000 cars.

According to auto market experts, domestic car consumption and assembly output may continue to increase in the coming time when the draft Decree of the Ministry of Finance proposes that from August 1, 2024 to January 31, 2025, the registration fee will be 50% of the fee prescribed in Decree No. 10/2022 of the Government regulating registration fees.

On the sales side, Mr. Nguyen Duy, Head of Sales Department of a Korean car dealership in Hanoi, said that over the past few months, the dealership has had to launch promotional policies, offer huge discounts, and offer much lower prices to stimulate consumer demand as well as reduce inventory. Therefore, reducing the registration fee by 50% for domestically produced cars will help stimulate consumer demand and boost the market.

“Since mid-June, the number of customers coming to the showroom has also shown signs of increasing compared to the previous month. Many people come to inquire and consult prices to wait until July to finalize the contract.

“For car models with reduced registration fees and popular prices, the car company also informed dealers that we will increase imports to serve customer needs. The number of cars is expected to increase in the near future,” said Mr. Duy.

Although there are some conflicting opinions on whether to keep 100% of the registration fee for domestically assembled cars or adopt a 50% reduction policy, in the context of a declining market but the number of imported cars still increasing, experts are concerned that the trend of companies is to only focus on importing and not on domestic production and assembly of cars. This may cause some consequences not only for the auto industry but also for the entire economy.

Therefore, the Government's continued policy of reducing 50% of registration fees for domestically produced and assembled cars at this time is considered a positive lever for the domestic automobile manufacturing industry as a financial support solution to promote consumption.