Vietnamese Car Market: A Year of Turbulence

The auto market in Vietnam was quite sluggish in 2023. Photo: Phương Lâm.

According to the latest report from the Vietnam Automobile Manufacturers Association (VAMA), the entire Vietnamese market consumed a total of 38,740 vehicles in the last month of 2023, including 24,044 locally assembled vehicles and 14,696 imported vehicles.

With a growth rate of 39% compared to November 2023 and the best performance since the beginning of the year, the auto market in Vietnam had a strong finish to a relatively challenging period.

Unusual Fluctuations in Sales

At the beginning of 2023, the entire Vietnamese car market experienced a significant decline with a drop of 51% in sales. At that time, the number of vehicles purchased by Vietnamese people plummeted to 17,314 in January 2023, with only 8,086 locally assembled vehicles and 9,228 imported vehicles.

The overall market sales quickly recovered with two consecutive months of growth. In March 2023, VAMA reported that car sales in the Vietnamese market reached 30,038 vehicles, a growth of 30.4% compared to the previous reported period. However, this growth trend did not last long as purchasing power rapidly declined in the following reporting month.

The Vietnamese car market only truly revived in the middle of the year when the favorable policy of reducing the registration fee for locally assembled vehicles was officially implemented. Although the sales did not increase as fast, stability returned. From June to the end of November 2023, the auto consumption in Vietnam did not experience significant surges or shocks like in the early months of the year.

It is worth noting that the booming purchasing power in December 2023 helped the total sales in the second half of the year to reach 164,664 vehicles, which is 27,337 vehicles higher than the sales achieved in the first two quarters of the year.

However, the cumulative sales of 301,989 vehicles after 12 months in 2023 still remain 25% lower than the same period the previous year. Thus, even with the same policy of reducing the registration fee applied for a similar period, the sales of locally assembled vehicles in 2023 decreased by 20% compared to the same period the previous year, and imported vehicles also decreased by 32% in terms of consumption volume.

Sharp Decline in Vehicle Imports

In December 2023, the report from the General Department of Customs revealed that a total of 7,650 completely built-up vehicles were imported into Vietnam with a total value of over 175 million USD.

Although there was a 1.9% increase in volume compared to the reporting month of November 2023, the imports of completely built-up vehicles into Vietnam in the last month of the year decreased by 9.1% in terms of value compared to the corresponding period of the previous month.

The report from the General Department of Customs also showed that in the whole year of 2023, a total of 118,942 completely built-up vehicles of all types completed the import procedures into Vietnam with a total value exceeding 2.83 billion USD.

Compared to the same period in 2022, the imports of completely built-up vehicles in the past year decreased by 31.5% in terms of volume and 26.3% in terms of value.

Vehicle imports sharply declined in 2023 in both volume and value. Photo: T.T.

Thailand and Indonesia continue to be the top two countries exporting cars to Vietnam in 2023. Specifically, the number of cars imported from Thailand in the past year was 53,942 units, with a total value of over 1.14 billion USD. With cars originating from Indonesia, the number of cars imported into Vietnam in 2023 was 42,676 units, with a total value of over 607 million USD.

China exported a total of 11,002 cars to Vietnam in 2023, while Japan and the United States exported 3,436 and 2,429 cars, respectively.

Among these, cars imported from Japan had the highest average value at around 60,910 USD/car. The average import value of cars from Indonesia was about 14,236 USD/car, while cars from Thailand had an average import value of around 21,235 USD/car.

Domestic Car Production Also Slows Down

The report from the General Statistics Office showed that in the fourth quarter of 2023, the total domestic car production in Vietnam was estimated to reach 106,800 units of all types, which was about 43% higher than the figures in the third quarter of 2023.

However, the estimated total number of locally assembled vehicles in Vietnam in the entire year of 2023 decreased by 27% compared to the previous year, reaching 347,400 units after 12 months.

Likely, the declining domestic car production in Vietnam partly resulted from the unsatisfactory sales performance of the whole market, particularly in the locally assembled vehicle segment. However, the 50% registration fee reduction policy implemented by the government in the second half of 2023 also had positive impacts and somewhat helped to revitalize domestic car manufacturing and assembly activities.

In particular, the domestic car production gradually increased after a significant decline in July 2023 and continued to grow for the remaining months of 2023. From 20,900 vehicles produced in the first month of the third quarter of 2023, the production at Vietnamese assembly lines steadily increased in the following 5 months.

With an estimated production volume of about 38,600 vehicles completed in December 2023, it became the month with the highest output of domestic vehicles in Vietnam throughout the whole year of 2023.

In general, although the entire Vietnamese car market had a challenging year in 2023, the positive growth signals demonstrated in the last month indicate a hopeful recovery of this market for the upcoming year.

The first months of 2024 are expected to witness further growth in car sales in Vietnam due to the increased demand for Tet holiday shopping. Along with that, numerous promotional programs and incentives from car brands and dealerships are anticipated to stimulate the overall purchasing power of the market.

While the beginning is always challenging, if positive sales results can be achieved right from the first month, the Vietnamese car market is likely to experience a brighter year in 2024 compared to the previous year.