ASEAN KEY DESTINATIONS
Vietnam: Weak financial markets blamed for slow sales of imported
In March, anticipating lower demand, a lot of imported car dealers offered big price discounts and gifts. Buyers were unmoved.
The private automobile market is heavily influenced by the ups and downs of financial markets, including gold, stock or foreign currency markets. The economic magazine says at least 60 percent of car buyers are also investors in stocks, gold or foreign currencies or officers of financial institutions.
When the profit from financial investments sags or, worse, investors take losses, those people don’t have money to buy automobiles, which are still a luxury product in Vietnam, especially imported automobiles.
According to industry sources, would-be buyers have turned conservative. They see that the Vietnamese stock market is only churning, while gold and foreign currencies have become a high-risk investment. Banks have tightened consumer credit. Even individuals with ample cash are keeping it under their pillows for the moment.
Car recall campaigns in the big markets of the world are another factor depressing sales of imports. Buyers who in the past were mainly sensitive to price are now paying more attention to the perceived risk of a purchase. Good information abut which cars are being recalled and why is scarce, and information on the procedures that owners must follow if their autos have problems is even scarcer.
The conventional wisdom is that it is dangerous to buy autos from importers, who typically offer no service guarantee. It’s said that many customers have decided they will only buy cars from authorized distributors, so that they can enjoy post-sale services.
Thus, though dealers are having trouble selling imported cars, authorized dealers are still doing OK. Sellers of ‘domestic’ automobiles, i.e., autos assembled in Vietnam, are doing even better, because buyers perceive that they won’t have a problem with post-sale services. Further, they are not as expensive.
Since the Tet holidays, the number of cars sold by members of the Automobile Manufacturers’ Association (VAMA) has been increasing steadily. From only 5030 cars in February, sales of domestic automobiles jumped to 9298 cars in March and 9551 cars in April.