Auto industry slump set to continue through 2023: insiders

Insiders expect things to be as gloomy as the Covid period, with sales unlikely to reach half a million units as it did last year.

Demand was unusually low in the fourth quarter of 2022, normally the peak shopping period just before Tet, the Lunar New Year, which falls in January-February.

The Vietnam Automobile Manufacturers Association (VAMA) said its members reported a decline in sales for four months in a row starting last October.Only 17,314 vehicles were sold in January, down 51% from December.

None of the top brands reported positive growth.

The situation did not improve in February. Ngan Ha, sales manager at Mitsubishi Phuong Nguyen, a dealership in HCMC’s Binh Tan District, said in late last month: “The market is stagnant now. People are hesitant to spend big on an item like a car.”

Only one or two people come to her showroom every day and none at all on certain days, she said. Managers at other dealerships too reported a similar situation, including those selling luxury cars.

Those who have bought luxury cars using finance now have to pay higher installments because of rising interest rates.

Vinh Nam, sales manager at Vietnam Star Automobile, distributor of Mercedes-Benz, in the southern province of Binh Duong, said: “Demand is decreasing by 50%. In 2023, Mercedes and other carmakers will launch many new models, but with the current demand and economic situation, their sales are unlikely to be as high as last year.”

Vo Quoc Binh, CEO of Binh Minh Company, which trades used cars and provides car care services in HCMC, blamed the slump on inflation, tightened credit, increasing interest rates, and difficulty in getting bank loans.

Interest rates on car loans are now 3-4 percentage points higher than a few months ago. The higher interest rates significantly affect middle-income earners’ car purchase decision, a sales manager at a dealership selling South Korean vehicles said.

Thanh Cong, distributor of Hyundai vehicles, expected overall industry sales to fall by 17.5% this year. Binh said: “Hopefully, the market will recover in the last quarter of this year.”

But he was pinning his hopes on the usual year-end spike in demand rather than an organic rise.