Auto market may witness authorized reseller boom

Analysts believe that with the new strict regulations on the import procedures, the automobile market in 2012 would have no room for unofficial car imports, while the market would witness the establishment of massive official authorized dealers.

The Circular No 20 released by the Ministry of Industry and Trade, which, according to the ministry, aims to re-establish the order on the car import market, is believed to put and end to the import of cars carried out by trade companies. Analysts have commented that private car dealers have no more choice than shifting to other kind of business or trading used cars, while giving the playing field to genuine manufacturers’ sales agents.

The Circular No 20 alone has made automobile dealers feel distressed. Meanwhile, the decision by the Hanoi and HCM City local authorities to increase the car ownership registration tax by five percent since January 1, 2012, has “put more oil into the fire,” which has made the business of private car dealers frozen.

However, it was lucky enough that most of them have sold the car they imported prior to the day the Circular No 20 took effect. In late 2011, people rushed to buy cars in order to avoid the higher car ownership registration tax, which became valid on January 1, 2012.

The disappearance of the independent car dealers on the market would spell that the import car market would be dominated by the official sales agents of automobile manufacturers. Both domestic automobile joint ventures, such as Mercedes-Benz, Honda, Mitsubishi, Ford, Isuzu, and official distributors for foreign manufacturers such as BMW, Audi, Porsche, Subaru, Chrysler, Renault, Citroen, Hyundai, would not have to compete with the car dealers, who were once redoubtable rivals.

The representative of a car showroom, an official sales agent on Cau Giay Street, said that the number of car buyers soared in December 2011.

“By December 22, the sales had soared by 150 percent in comparison with the month before,” Minh, the accountant of the showroom, said.

Distributors said the best sellers are the ones priced between 500 million dong and 700 million dong, including Cerato, Lacetti, Fiesta and Kia Morning. At the sale agent of Truong Hai Automobile Corporation on Pham Hung Road, reporters saw five successful transactions, while three of them chose domestically assembled Kia Morning.

Analysts have also noted the establishment of more and more official authorized agents. A lot of the sales agents of domestic automobile manufacturers such as Toyota, Honda, Truong Hai, Vina-Mazda, Hyundai Thanh Cong have been set up recently.

Commenting about the growing tendency, Dinh Manh Chi, Director of Subaru Hanoi, the official distributor of Subaru cars in the north, said that this is an inevitable tendency, because this is the only way for enterprises to do business after the Ministry of Industry and Trade closed the border gates to the car imported by independent trade companies.

Khanh, a customer in HCM City, said he is looking for an imported Hyundai Avante. However, he has not found any car. He has been told that the model has not been imported any more after the new circular took effect. Meanwhile, Hyundai Thanh Cong only distributes Avante of the old generation. Therefore, he is considering buying Hyundai Sonata of Thanh Cong.

It is expected that more and more authorized dealers would be set up in 2012. Renault just opened its second showroom in HCM City in January. Mercedes Benz is planning to open a new showroom in Phu My Hung urban area.