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NEWS UPDATES 23 April 2010

Vietnam: Car makers launch sales promotions to offset price hikes

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Despite the low purchasing power, automobile manufacturers in Vietnam have raised sale prices. Now they have to offer sales promotions to attract buyers, reported VietnamNetBridge on its website.

Many automobile manufacturers have raised the sale prices two times since the beginning of the year. On January 1, 2010, the manufacturers, for the first time, raised the price when the VAT increased from five percent to 10 percent.

And now, they have raised sale prices again, reasoning that the dong/dollar price has increased from 18,479 dong to 19,100 dong per dollar.

Effective in March, Toyota Vietnam increased the price per car by 20-30 million dong. Camry 2.4G, for example, is now selling at 998.9 million dong per car, which is an increase of 31.3 million dong, while Corolla Altis 2.0 has seen a price increase of 23.7 million dong to 754.5 million dong.

Honda followed the move when it announced the price increase of 19-32 million dong per car as of April 1, 2010. Civic 1.8MT is now selling at 613 million dong per car, an increase of 19.8 million dong, while Civic 1.8AT is priced at 682 million dong, up by 22.3 million dong.

Ford Vietnam has also raised the sale prices of its models. Transit, for example, has seen the price increase by $1,700 to $37,300 per car, while Mondeo’s price has increased by $2000 to $49,990 per car. The new prices took effect on April 1st.

The price increase proves to be highly debated move by automobile manufacturers especially due to the current low purchasing power of the average person. To explain this, an expert said that automobile manufacturers are just trying to show to Government agencies that the car prices are influenced by tax policies and dong/dollar exchange rates.

While automobile manufacturers raise sale prices, they are forced to offer sales promotions and campaigns in order to attract more customers, especially when recent sales have been going very slowly.

Analysts say they have never seen such big sales promotion packages like these. One manufacturer offers a coupon for purchasing petrol worth 12 million dong. Another manufacturer offers the price discount of up to 1200 dollar to the buyers of a certain model.

A salesman of Toyota said that sales agents in Hanoi are competing with each other to lure customers by lowering the actual prices of cars. Some sales agents even promise to give 3-5 million dong to customers if they purchase cars from their agents.

However, it seems that all the efforts still cannot help get the car market heated up. Vu Dinh Bach from Ford Thang Long said that car dealers all have to expect low sales this year after a prosperous year 2009.

It is now the most difficult period for car dealers, when the average purchasing power is very weak. Statistics showed that in March, Ford sold 603 cars, a decrease of 30 percent, Honda sold 179, a decrease of 44 percent, GM Daewoo 749 cars, a decrease of 34 percent, Mercedes Benz 129 cars, a decrease of 70 percent compared to the same period of the last year.


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