Market Decline and Revival Efforts
The early 2023 witnessed a substantial decline in the local auto market, with 47% and 52% drops in car sales in April and May, respectively. This decline affected both domestically-produced and imported vehicles, prompting a proactive response from car manufacturers.
Reviving the Market – Incentives and Discounts
Major players like Toyota, Hyundai, Honda, Mitsubishi, Mazda, KIA, and Nissan introduced a range of incentives to revive the market in May 2023. These incentives included reductions in registration fees, free accessory sets, insurance packages, and zero-interest loans for the first six months, providing significant savings for car buyers.
Government Intervention
The Vietnamese Government’s issuance of Decree 41/2023/NĐ-CP, reducing registration fees by 50% for domestically produced and assembled cars, aimed to bolster the domestic automobile industry. Despite these efforts, the market faced challenges, hindered by high car inventory and elevated interest rates for consumers relying on loans.
Resilience of Automotive Companies
Despite market challenges, automobile companies in Vietnam maintained their product lines, launching nearly 40 new models in 2023. The focus was primarily on mid-range urban cars in the B and C segments, with models like the Toyota Vios and Mazda CX-5 as best-sellers benefiting from registration fee reduction policies.
Market Performance – Auto Sales and Electric Vehicles
Auto sales in the first 11 months of 2023 saw a 28.72% decrease compared to the previous year, totalling 263,251 vehicles. Notably, driven by VinFast’s new models, electric vehicle sales experienced a 5% increase in the third quarter.
Shifting Preferences – SUVs Overtake Sedans
In a noteworthy shift, SUV sales surpassed sedans for the first time in November 2023, becoming Vietnam’s most popular car model. This change reflects evolving consumer preferences, particularly among the young demographic, signalling a significant transformation in the Vietnamese automobile market.
Consumer Preferences – B-Class Sedans and SUVs
Economic challenges have influenced consumers toward smaller cars in the B-class sedan segment, favouring models like the Toyota Vios, Hyundai Accent, and Honda City. B-class SUVs such as the Hyundai Creta, Toyota Corolla Cross, and Kia Seltos also gained popularity.
Electric Vehicles and Changing Policies
VinFast’s electric SUVs, the VF E34 and VF 8, gained traction due to evolving consumer preferences and favourable policies on Special Consumption Tax (SCT) for electric vehicles in Vietnam. These models secured top-selling positions in April and May 2023.
Chinese Manufacturers’ Interest
The development of Vietnam’s automobile market in 2022 attracted interest from leading Chinese car manufacturers. While cautious due to past experiences, several Chinese models were introduced in Vietnam by the end of 2022 and early 2023, indicating a strategic approach to the Vietnamese market.
