Foreign exchange rates eat into car sales

Unfavourable foreign exchange rates in February have taken a toll on the sales of imported automobiles.

Total sales by members of the Vietnam Automobile Manufacturers Association (VAMA) reached just 7,889 units in February, a decrease of 24 percent from January sales, with passenger car and SUV sales declining by an even more substantial 35-37 percent, according to VAMA representative Nguyen Anh Tuan.

January auto sales had totalled 10,424 units, an increase of 48 percent over the prior January but still 17 percent lower than sales in December 2010.

Imports of completely-built units (CBUs) fell from 6,100 units in January to just 4,500 in February, according to figures from the General Statistics Office.

Meanwhile, marques such as Toyota, Ford, GM Daewoo, Mercedes-Benz, BMW and Hyundai have all increased their retail prices substantially since the devaluation of the Vietnamese dong against the US dollar last month.

Toyota 's sticker prices have risen by 34-101 million VND (1,619-4,809 USD), while Ford has hiked prices by 37-64 million VND (1,761-3,047 USD) and Honda by 13-32 million VND (619,000-1,523 USD) per vehicle. A buyer of a Honda Accord 3.5 AT, for instance, can now expect to pay 50 million VND more.

Tran Kien, a car dealer on Le Van Luong Street in Hanoi , said auto sales slowed substantially in February. Many automobile dealers were also ceasing imports of new cars with the aim of first selling existing inventories, he said.

The continued rise of the dollar, higher interest rates on consumer loans, and higher VAT and registration fees would add up to a sluggish car market this year, Kien predicted.