Stalled sales disheartens auto dealers

Even though car dealers have been trying to launch promotional campaigns to stimulate demand, auto sales have been going very slowly throughout the country.

Le Minh Thien, the owner of an import car showroom in HCM City, lamented that sales are very slow in the last few months. Thien admitted that sometimes he has to sell cars at a loss to take back capital.

Other car showrooms of the city are also quiet these days. One sales associate revealed that, on some days, they have no visitors. Previously, he recalled, he could sell several cars a day, but now he would be happy to sell one a week.

Phung Van Minh, Deputy Director of Hai Chau Company, an import car trader, complained about the slow market too. He predicted that small firms may close, because they lack enough earnings to pay their rent and staff salaries.

Domestically-assembled auto sales have also slowed, despite many promotions. Vidamco launched a campaign to reduce prices 9.6-25 million dong per car for Vivant, Captiva, Lacetti and Gentra models. Ford Vietnam has also announced a 10 million dong price reduction for Mondeo, while Mercedes has decided to prop up five percent of the ownership registration tax, applied to models like GLK 4 Matic, C300 A Vangarde.

Nguyen Van Bong, a Toyota sales agent, commented that these efforts still have not helped.

According to Nguoi Lao Dong newspaper, tax and fee increases have made car prices rise by 10 percent over the end of 2009. The new plan to collect fees from cars entering the city center, as well as the overloaded transport system, has discouraged potential buyers.

Tran Tien Manh, Director of Hoa Binh Trading Company in HCM City, has canceled plans to buy a car in favor of renting. According to Manh, if he purchased a car now, he would pay 1.2 billion dong plus some 30 million dong more a month. To rent a car, he pays only 20 million dong a month.

In forecasts of the car market towards the year’s end, car dealers expect the current situation will not improve. They point to Circular No. 71 by the Ministry of Finance on defining car tax value. The taxable values will be market prices, not those written down on bills of sale. For a long time, car buyers have evaded taxes by colluding with auto dealers. The prices on the bills were just equal to 60-80 percent of the actual prices. Now, with enforcement of Circular No. 71, the price of cars will rise, making the auto market stall further.

According to Vietnam Automobile Manufacturers’ Association (VAMA), in July 2010, member companies sold 9439 cars, a decrease of 13 percent over the same period of last year, and a decline of six percent over the previous month.