The Xforce at a Mitsubishi dealership in Quy Nhon City, Binh Dinh, January 2024. Photo: Quoc Huy

After achieving record sales of more than half a million units for the first time in the history of the Vietnamese automobile industry in 2022, the market declined by 25% in 2023. The instability of the macroeconomy of automobile manufacturers affected car purchasing power and could extend into 2024. However, representatives of aumotobile companies and many experts believe that the market will be more vibrant, although not as high as in previous years.

"We expect purchasing power to grow again this year," said Mr. Ruchik Shah, General Director of Ford Vietnam, at a media meeting in early 2024 in Ho Chi Minh City. "Many new products were launched last year, so customers will have more choices."

Ford was the only automobile company in the Vietnamese market that experienced positive growth in 2023, among brands that announced specific sales figures. The rest, such as Toyota, Hyundai, Kia, Mitsubishi, etc., saw a decrease in sales. However, as the leader of Ford Vietnam noted, the market recorded a record number of new car launches.

In 2023, companies launched a total of nearly 60 new car models, including upgraded versions and first-time sales. This is one of the important bases stimulating people's purchasing power, in addition to the marketing programs of companies or dealers. Many of these new car models were launched in the second half of 2023. As the supply becomes more stable, customers will have the opportunity to buy and receive cars early in 2024, limiting the price gouging.

Mr. Duc Hieu, a data analysis and market forecasting expert in Ho Chi Minh City, said that the 2024 market has the opportunity to see a resurgence in sales, but will not reach the heights of previous years. "Dealers are still struggling because people's purchasing power is still limited," Mr. Hieu said. "The instability of the economy has not shown many optimistic signs, so consumer goods like cars will still make customers consider carefully."

Sharing the same opinion, the head of the strategic planning department of a Japanese car company in Vietnam said that spending money on cars is not as easy as in previous years because people are still cautious. "An example of this is that currently, banks' deposit interest rates are low, but money still flows into them," he said.

According to him, when investment channels such as real estate and securities are still facing difficulties and people see instability everywhere they look to invest, they tend to deposit rather than spend money. And cars are not a spending priority at the moment.

Faced with the remaining obstacles in the Vietnamese automobile market, experts believe that price reductions will still be regularly maintained in 2024. This is the form of sales that has the most direct impact on consumers' shopping psychology. Car models that saw price gouging of tens of millions of VND at the end of 2023 due to scarcity, such as the Hyundai Palisade, Custin, Toyota Innova, and Honda CR-V hybrid, have returned to their listed levels or reduced their price gouging since the beginning of 2024.

Some car dealers in Ho Chi Minh City said that in the first month of 2024, purchasing power was not too abundant even though it was close to the Lunar New Year. Part of the reason comes from people buying cars in the last months of 2023 to enjoy preferential registration fees (Decree 41). There is a Tet holiday in February, so it is difficult for sales to grow significantly.

Regarding consumption trends, experts believe that small, high-ground-clearance cars will continue to be the main competitive area for manufacturers, in addition to MPVs. After the Lunar New Year, Mitsubishi dealers will deliver the first Xforce models to customers. This model will compete with two Korean rivals leading the B-segment, the Hyundai Creta and the Kia Seltos.

The presence of VinFast VF 3 in the second half of 2024 will further stir up the A+ CUV segment, where the Kia Sonet, the best-selling small, high-ground-clearance car model on the market in 2023, is already present. Other hot models, such as the Honda CR-V, Hyundai Custin, Venue, etc., are expected to have a full sales year.

In the electrified car segment, VinFast almost has no competitors in the mass-market segment in terms of sales, as its pure electric product range is nearly full, from size A+ to E. Companies such as Toyota, Hyundai, Kia, Honda, etc., sell hybrid or pure electric products that provide more options for users. For luxury automobile manufacturers, in addition to the main competition between BMW and Mercedes, electric cars will have more choices from brands such as Porsche, Audi, and Volvo.