Left with no incentive to buy cars

The domestic car market has hit a lull because no one wants to purchase cars just several days before tax incentives finish on December 31.

“I have never seen such a slow year-end sale season before,” said V an officer at a car trading company on Le Van Luong Road in Hanoi

V said he received only two visitors yesterday. Meanwhile, in mid November, he received more than 10 visitors a day.

V said the demand has dropped dramatically towards the year-end just as the demand stimulus package ends. The Ministry of Finance has decided the tax incentive of reducing 50 percent of car ownership registration tax will finish as scheduled on December 31, 2009 and will not be extended as originally proposed.

V’s company still has 70 unsold cars.

V says people who planned to purchase cars, have done so already in order to be able to enjoy the tax incentives. Therefore, he does not think that he will be able to sell many more cars in the last days of 2009

Nguyen The Hung, chairman of Kylin Company, a car trading company, complained the sales revenue had decreased by a half in the last month due to the decreasing demand.

The low demand has forced car dealers to cut prices.

VietNamNet also found the price of car imports has decreased by $1,000-2,000 per car.

For example, a Toyota Camry 2.0 imported from Taiwan has dropped from $48,000 to $46,000, while a Toyota Camry imported from the US has decreased from $60,000 to $59,000.

Daewoo Lacetti is now selling at $27,800 instead of $29,000, while Hyundai I30 from $32,000 to $31,000 dollar.

However, there are big gaps between prices quoted by different showrooms and car dealers.

Indochina car showroom on Hoang Cau Street quoted the price of $46,000 for Toyota Camry imported from Taiwan. Meanwhile, Ngoc Anh showroom at No 8 Tran Dang Ninh announced the sale price at $48,000 on the same day, while Hoang Gia Auto are asking for $47,500.

Analysts say car dealers have made inaccurate forecasts about the purchasing power of the market.

“They hoped that the purchasing power would be very big, and they could not imagine that people would run out of money so soon,” an analyst said

Small companies turned out to be wiser than larger ones. Since they had smaller capital to invest they imported only a small volume of cars which have sold out. Meanwhile, bigger companies still have unsold cars.