Vietnam's auto market in 2024 is expected to flourish

After the first record sales of more than half a million units in the history of the Vietnamese automobile industry in 2022, the market turned around and decreased by 25% in 2023. Macroeconomic instability has affected car purchasing power and is likely to last until 2024. However, representatives of car companies and many experts believe that the market will be more vibrant, although not as high as in previous years.

"We expect purchasing power to grow again this year," said Mr. Ruchik Shah, General Director of Ford Vietnam, at a meeting with the media in early 2024 in Ho Chi Minh City. "Many new products have been launched in the past year, so customers will have more choices."

Ford is the only car manufacturer in the Vietnamese market with positive growth in 2023, only considering brands that announced specific sales figures. The rest, big names like Toyota, Hyundai, Kia, Mitsubishi... all saw sales declines. However, there is one sign, as the leader of Ford Vietnam said, that the market recorded a record number of new car launches.

In 2023, manufacturers will launch a total of nearly 60 new models, including upgraded versions or first-time sales. This is one of the important bases to stimulate people's purchasing power in addition to marketing programs of manufacturers or dealers. Many of these new models will be launched in the second half of 2023. When supply is more stable, customers will have the opportunity to buy and receive cars early in 2024, limiting the situation of price gouging.

Mr. Duc Hieu, a data analysis and market forecasting expert in Ho Chi Minh City, said that the 2024 market has a chance to grow sales again, but it will not be as high as in previous years. "Dealers are still facing difficulties because people's purchasing power is still limited," Mr. Hieu said. "The instability of the economy has not shown many optimistic signs, so consumer goods such as cars will still make customers consider carefully."

Sharing the same view, the head of strategic planning of a Japanese car company in Vietnam said that spending money on cars is still not as liberal as in previous years because people's cautious mentality is still present. "An example of this is that currently, bank deposit interest rates are low but money is still flowing into them," he said.

According to this person, when investment channels such as real estate and stocks are still facing difficulties, people see instability everywhere to invest, so they tend to save rather than spend money. And cars are a type of spending that is not a priority in the current context.

Given the remaining obstacles in the Vietnamese auto market, experts believe that price reductions will continue to be maintained regularly in 2024. This is the form of sales that has the most direct impact on consumers' purchasing psychology. Channel car models priced at tens of millions of dong at the end of 2023 due to shortages such as Hyundai Palisade, Custin, Toyota Innova, Honda CR-V hybrid have returned to their listed prices or reduced channel prices since the beginning of 2024.

Some car dealers in Ho Chi Minh City said that the first month of 2024 saw not much purchasing power even though it was close to the Lunar New Year. Part of the reason was that people rushed to buy cars in the last months of 2023 to enjoy preferential registration fees (Decree 41). February had a Tet holiday, so sales were unlikely to grow strongly.

In terms of consumer trends, experts say that small SUVs will continue to be the main competitive area for manufacturers, alongside MPVs. After the Lunar New Year, Mitsubishi dealers will deliver the first Xforce models to customers. This model will compete with two Korean rivals leading the B-segment, Hyundai Creta and Kia Seltos.

The presence of VinFast VF 3 in the second half of 2024 will further stir up the A+ CUV segment, which will include Kia Sonet, the best-selling small SUV in the market in 2023. Other hot models such as Honda CR-V, Hyundai Custin, Venue... will have a full year of sales.

In the electric vehicle segment, VinFast has almost no competitors in the popular segment in terms of sales when the pure electric product range is almost full, ranging from A+ to E. Companies like Toyota, Hyundai, Kia, Honda... sell hybrid or pure electric products to add more options for users. For luxury car companies, in addition to the main race of BMW and Mercedes, electric vehicles will have more options from brands like Porsche, Audi, Volvo.